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AUGUST, 1976
■'I
How Big-City Correspondent Banks
Assist Downstream Customers
In Three Important Areas:
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Federal Reserve Bank of St. Louis
(Page 23)
LIBERTY PRESENTS
RAUL NADLER AND
JACK RATTEN ON
PROFIT PLANNING.
Paul Nadler says...
pants’ decision making. Rather,
it must use every possible means
of shortening its response time
when external factors change
and mid-course corrections are
n ee d ed . In sh o rt, a u to m a te d
e a rn in g s m a n a g e m e n t is the
name of the gam e’.
Jack Patten says:
P la nn in g and m a n a g e m e n t...
they are synonymous with us
and S ecurity National of Norman
uses L iberty’s Management Re
porting System to help us set
goals and plan for consistent
profit growth. You know, these
days com m unity banks face the
same decisions that the giant
banks face because we basically
are com peting with them in the
marketplace. And, EFTS is going
to bring the whole banking sys
tem together in the same market
place for sure. S o ...w e just
sim ply have to know what is
going on and how it impacts the
bottom line. And that means all
my key officers must be involved.
The old adage “ if you don’t know
where yo u ’re going, any road will
take you th e re ” has special appli
cation to the banking industry.
You know, the num ber one con
cern of every bank e x e c u tiv e ...
their sh areholders... and now
the regulators is ‘maximum long
range earning pow er’.
But the velocity of change of
a growing num ber of factors
which influence earnings is al
most breathtaking. So, respon
sible management today can no
longer trust impulsive seat of the
But MRS has helped us in many
ways: One of the most important
is that it has helped us ‘manage
the spread’ . .. and what profits
your bank makes really has a lot
to do with this. Now we identify
trends earlier and consider the
‘m id-course’ corrections neces
sary to make our planned profit
performance. We sim ply c o uldn ’t
have gotten there in the first
place w ithout the basic informa
tio n we g e t fro m o u r MRS
System.
Liberty says:
Helping bankers plan for profits,
measure results to control those
profit le v e ls ... and acting rather
than re a c tin g ... tha t’s what the
MRS can do. It is asset and
liability management for profit
p la n n in g . . . re sp o n se t im e . . .
awareness . . . knowledge . . . sim
plified re p o rtin g ... management
and increased regulatory confi
dence ... th a t’s what the MRS is
all about. In short, “ the name of
the gam e” is automated earnings
management.
m
tiß LIBERTY
T H E B A N K O F M ID -A M E R IC A
Liberty National Bank and Trust Company/P. O. Box 25848/Oklahoma City, Oklahoma 73125/405/231-6438/Member FDIC
M ID -C O N TIN E N T BANKER is p u b lis h e d 13 tim e s a n n u a lly (tw o issues in M ay) a t 403 O live, St. L ou is, Mo. 63102. A u g u s t, Vol. 72, No. 9. S econdC lass p ostage p a id a t F u lto n , Mo. S u b s c rip tio n : $10.
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
When your drive-up system isn’t
working, it really works against you. Cus
tomers become annoyed, get behind
schedule or are just plain inconven
ienced. And you’re going to hear about it.
Of course, a system that’s down
too often may drive customers away
altogether. Like over to your friendly
competition.
At Security, we eliminate the
inherent hold-ups in drive-up banking
with our RTS II, the system that took
two years to perfect. It’s the most reli-
able system on the market. But reliability
is just the beginning.
With its rugged, single tube
delivery system, customers make trans
actions quickly and simply. And true-tolife voice communications let both
customer and teller speak simultane
ously. It’s easy. It’s fast. And it works.
But the bottom line is where it
all comes together. The RTS II is priced
down with the lowest cost systems—
none of which even come dose to offer
ing the reliability and features found in
the RTS II. Once you order, you’ll get
the fastest delivery available; usually
less than 30 days. In fact, your system
is in one of our regional warehouses
right now.
W rite tod a y fo r c o m p le te
information.
The RTS II.The simple, reliable
system that won’t hold you up.
c r r i
IP IT U ^ P M
H h
P
CORPORflTIOn H
2 0 5 5 S.E. Main Stree t
Irvine, California 92714
(714)979-9000
SECURITYELIMINATESONEOFBANKING’S
BIGGEST HOLD-UPS.
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Federal Reserve Bank of St. Louis
There’s
a lot of
community
leadership
behind
Central Trust
T H E C E N T R A L T R U S T C O M P A N Y , N .A .
C ondensed Statem ent o f C on dition
A SSETS
June 30, 1976
B O A R D OF D IR E C T O R S
O liver W . B irck h ead
Jo h n T . M urphy
P resid en t
P resid en t,
T h e A vco B r o a d ca s tin g C orp .
Paul E. B ro w n
Cash and D ue From B a n k s ..................................... $107,1 1 3 ,8 1 8
Investm ent Securities:
U .S . G ov ern m en t O bligation s........................
97,9 4 1 ,9 2 0
O bligations o f States and
P olitical Su b d ivision s.................................. 136,429,137
O ther Secu rities.....................................................
2,015,369
F letch er E. N yce
G en eral M a n a g er,
C in cin n ati B en g als, In c.
V ice C h a ir m a n o f the
E xecu tive C om m ittee
Paul W . C h ristensen, Jr .
C. Law son R eed , Jr .
P resid en t,
T h e C in cin n ati G ear C o.
P resid en t,
X o m o x C orp ora tion
Edward M . Condon
C h a ir m a n a n d C h ie f E xecu tive Officer,
T h e H . (d S . P o g u e C o.
H arry Rossi
P resid en t a n d C h ie f E xecu tive Officer,
T h e U n ion C en tra l L if e In su ra n c e C o.
W illiam H . D ick h o n er
Stuart B . Su tph in, Jr.
P resid en t,
C in cin n ati G as Cf E lectric C o.
S e n io r V ice P resid en t,
C on solid ated F ib res In c.
R ich a rd T . Dugan
Ashley F. W ard
P resid en t,
C in cin n ati B e ll
P resid en t,
A s h le y F . W ard, In c.
Jam es R . W illiam s
P residen t,
C in cin n ati M ilac ron In c.
P resid en t,
J a m e s R . W illia m s In vestm ent C o.
Jam es P. H errin g
L u cien W ulsin
C h a ir m a n o f the B o a rd ,
D . H . B a ld w in C o.
George C. Juilfs
D IR E C T O R S E M E R IT I
P resid en t,
S en co P rod u cts, In c.
W illiam E. A nderson
Joseph D . Landen
Paul M . A rn all
E xecu tive V ice P resid en t
E lm er R . Best
Fred Lazarus, 111
W illiam O. D eW itt
C h a ir m a n o f the B o a rd ,
T h e J o h n S h illito C o.
F red erick V . G eier
Jam es K . Lewis
M . R. G reiser
E xecu tive V ice P resid en t
F. George H eid ach er
P errin G. M a rch , I I I
Bayard L. Kilgour, Jr .
P resid en t,
C in cin n ati In c o rp o ra ted
Jo h n A. Lloyd
Lloyd I. M ille r
W illiam A. M itch ell
P residen t,
A m erica n C on trolled In d u stries, In c.
D onald E. R eich eld erfer
Jam es E. M oun tjoy
E xecutive V ice P resid en t
T . Spencer Sh ore
W illiam J. W hittaker
23 6 ,3 8 6 ,4 2 6
4 18,584,619
6,162,322
412,422,297
Jam es A. D . G eier
C h a ir m a n o f the B o a r d
T h e K r o g e r Co.
T o tal S e cu rities......................................................
Loans (N et of U n earn ed D iscount
o f $2 0 ,1 8 3 ,2 3 1 in 1976 and
$ 1 7 ,6 7 9 ,0 8 6 in 1 9 7 5 )...........................................
Less V aluation R eserve for Possible
Loan Losses............................................................
Funds L o an ed .................................................................
33,550,000
B an k in g Prem ises and E q u ip m e n t......................
8,8 9 6 ,8 5 9
In com e Earned— N ot C o lle c te d ............................
7,685,734
O ther A ssets....................................................................
7,267,538
T o tal A ssets.............................................................. $813,3 2 2 ,6 7 2
L IA B I L I T I E S
Deposits:
D em an d ..................................................................... $ 2 85,028,935
Savings........................................................................ 2 05,103,590
T im e ............................................................................
182,720,833
T o tal D eposits.................................................
Funds B o rro w e d ...........................................................
Secu rities Sold U n d er A greem ent
T o R ep u rch a se.......................................................
D ividend P a y a b le ........................................................
A ccrued T axes, Interest and Expenses
and O ther L ia b ilities...........................................
672,85 3 ,3 5 8
31,300,000
T otal L ia b ilitie s ....................................................
737,104,585
C A P IT A L A C C O U N T S
C apital Stock (1,215,265 sh a res)...........................
Su rp lu s...............................................................................
U n divid ed P rofits.........................................................
12,152,650
42,8 4 7 ,3 5 0
21,218,087
T o tal C apital A ccou n ts......................................
76,218,087
8,2 4 5 ,0 0 0
971,052
23,735,175
T otal Liabilities and C apital A cco u n ts.............. $ 8 13,322,672
TH E CENTRAL TRUST COMPANY
FOURTH &
V I N E ST R E E T S
• C I N C I N N A T I , O H I O 45201
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
n .a
.
M em b e r : F e d er a l D ep osit In s u r a n c e C orp ora tion • B a n k in g C en ters a ll over H am ilto n C ou nty
Convention Calendar
The Financial Magazine o f the Mississippi Valley & Southwest
Septem ber
Volume 72, No. 9
August, 1976
FEATURES
23 H O W CORRESPONDENTS ASSIST DOWNSTREAM CUSTOMERS
In agriculture, international banking, industrial development
24 FARMERS' ESTATE-TAX PROBLEMS
Is incorporation the solution?
27 THE ROLE OF AG /LEASING
In financing farm equipment
Donald L. D efers
36 INTERNATIONAL BANKING NEWS
A roundup of recent events
45 BANK BACKS INDUSTRIAL REDEVELOPMENT
Its efforts halt area deterioration
Rosemary McKelvey
54 RENOVATION ENSURES FUTURE FOR TOW N
Banker, businessmen spark remodeling effort
66 CREDIT LIFE INCO M E PROPOSAL
Comptroller issues proposed regulation
DEPARTMENTS
10 THE BANKING SCENE
14 BANKING WORLD
18 NEWS ROUNDUP
12 EFTS
16 OPERATIONS
20 SELLING/MARKETING
STATE NEWS
84 ALABAM A
85 INDIANA
86 LOUISIANA
84 ARKANSAS
85 KANSAS
86 MISSISSIPPI
89 O KLA H O M A
85 ILLINOIS
86 KENTUCKY
86 MISSOURI
89 TENNESSEE
89 NEW MEXICO
90 TEXAS
nmniHiiiniiiniiiiiiinninii
Editors
Ralph B. Cox
Editor & Publisher
Lawrence W. Colbert
Assistant to the Publisher
Rosemary McKelvey
Managing Editor
Jim Fabian
Associate Editor
Daniel H, Clark
Editorial Assistant
Advertising Offices
St. Louis, Mo., 408 Olive, 63102, Tel. 314/
421-5445; Ralph B, Cox, Publisher; Mar
garet Holz, Advertising Production Mgr.
Milwaukee, Wis., 161 W. Wisconsin Ave.,
53203, Tel. 414/276-3432; Torben Soren
son, Advertising Representative.
6
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Federal Reserve Bank of St. Louis
siiiiiiiiiiîiiiiiB n iim iiiii
MID-CONTINENT BANKER is published
13 times annually (two issues in May)
by Commerce Publishing Co. at 1201-05
Biuff, Fulton, Mo. 65251. Editorial, execu
tive and business offices, 408 Olive, St.
Louis, Mo. 63102. Printed by The Ovid
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postage paid at Fulton, Mo.
Subscription rates: Three years $21; two
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Commerce Publications: American Agent
& Broker, Club Management, Decor, Life
Insurance Selling, Mid-Continent Banker,
Mid-Western Banker, The Bank Board
Letter and Program. Donald H. Clark,
chairman; Wesley H, Clark, president;
Johnson Poor, executive vice president
and secretary; Ralph B. Cox, first vice
president and treasurer; Bernard A. Beggan, William M. Humberg, Allan Kent,
James T. Poor and Don J. Robertson,
vice presidents; Lawrence W. Colbert,
assistant vice president.
Sept. 4 -7 : A ssem bly fo r B a n k D irectors, Colo
rado Springs, Colo., The Broadm oor.
Sept. 12-14: K en tu cky B an k e rs Association
A nnual Convention, Louisville, G alt House.
Sept. 12-14: B a n k M arketing A ssociation,
E F T S C onference, Toronto, Can., H otel T o
ronto.
Sept, 12-15: A BA B a n k Card A nnual Con
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Sept. 12-17: R ob ert M orris A ssociates, Loan
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Sept. 12-17: K ansas, M issouri & N ebraska
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ing, Lin coln , Neb., U niversity of N ebraska.
Sept. 15-17: A BA Sou th ern Regional O pera
tions/A utom ation W orkshop, San Antonio,
T ex.. H ilton P alacio del Rio.
Sept. 19-21: B a n k M arketin g Association, P u b
lic R elation s C onference, Chicago, Chicago
M arriott Hotel.
Sept. 19-22: A B A N ational P erson n el Con
feren ce, San Francisco. F airm on t Hotel.
Sept. 20-21: M ortgage B an k ers A ssociation,
P resid en t’s Conference, New O rleans, Hyatt
R egency Hotel.
Sept. 26-29: N ational Association of B an k
Women. In c., A nnual Convention, New
Y ork, W aldorf A storia.
Sept. 27-28: R ob ert M orris A ssociates, L en d
ing to B an k s & B a n k Holding Com panies
W orkshop, Chicago, H yatt R egency O’Hare.
O ctober
Oct. 2 -6 : A BA A nnual Convention, W ashing
ton. D. C.
Oct. 6 -8 : N ational A ssociation of R eal Estate
Investm ent Trusts, Annual C onference, C h i
cago, Hyatt R egency, Chicago.
Oct. 13-17: Consumer B an k ers A ssociation,
Annual Convention, W hite Sulphur Springs.
W. Va.. T he G reen brier.
Oct. 17-20: R ob ert M orris A ssociates, Annual
F a ll Conference, Chicago, H yatt R egency.
Oct. 17-20: B a n k A dm inistration Institu te,
A nnual Convention, Philadelphia.
Oct. 24-27: B a n k M arketin g A ssociation, A n
nual Convention, M iam i B each , Fon tain e
bleau Hotel.
Oct. 24-29: K ansas, M issouri & N ebraska
B an k e rs A ssociations, In term ediate School
o f B an kin g, Lin coln , Neb., U niversity of
N ebraska.
Oct. 25-27: M ortgage B an k ers A ssociation,
A nnual Convention, San Francisco, San
Francisco Hilton.
Oct. 27-29: ABA M idw estern R egional O pera
tions/A utom ation
W orkshop,
St.
Louis,
Chase P ark Plaza.
Oct. 31-Nov. 5: K ansas, M issouri & N ebraska
B an k e rs A ssociations, Advanced School of
B an kin g,
Lin coln ,
Neb.,
U niversity
of
N ebraska.
Novem ber
Nov. 3 -5 : A B A In tern ation al Foreign E x
change Conference, New Y o rk City, W al
dorf A storia Hotel.
Nov. 3 -5 : B a n k A dm inistration Institu te F i
n an cial A ccounting & R eporting Sem inar,
D allas, M arriott Hotel.
Nov. 4 -7 : Assem bly fo r B a n k D irectors, P in ehurst, N. C., P in eh u rst H otel & Country
Club.
Nov. 7-10: A BA Correspondent B an k in g Con
feren ce. Dallas, F airm on t Hotel.
Nov. 7-10: Independent B an kers Association
o f A m erica B a n k O w nership Sem inar/
W orkshop, P hoen ix, A riz., B iltm ore Hotel.
Nov. 7-12: A BA N ational P erson n el School,
Memphis, H yatt R egency Hotel.
Nov. 7-19: ABA N ational Com m ercial Lending
School, Norm an, O kla., U niversity o f O kla
homa.
Nov. 8-10: B an k A dm inistration In stitu te D e
term inin g ED P Jo b Costs, Boston, Colonnade
Hotel.
Nov. 10-12: ABA M id-C ontinent T rust Con
fe ren ce, Cincinnati, Stou ffer’s Cincinnati
Inn.
Nov. 10-12: B a n k A dm inistration Institu te
B a n k HC A dm inistration Sem inar, P a rk
Ridge. 111., B A I H eadquarters.
Nov. 10-12: Association of B a n k HCs F all
M eeting, C arefree, Ariz., C arefree Inn.
Nov. 13-17: B a n k A dm inistration In stitu te
Forum fo r Presidents of N o t-So -Sm all Com
m unity Ban ks, P hoen ix, A riz., B iltm ore
Hotel.
Nov. 14-17: A BA N ational A gricu ltural &
R u ral A ffairs Conference, New Orleans,
New O rleans M arriott.
MID-CONTINENT BANKER for August, 1976
You’re looking for extra profits.
Our cash letter analysis can
uncover ’em.
It’s surprising how much
potential pro fit is buried under
slow paper.
That’s why w e ’ve developed
an e ffe ctive action program to
help you get things moving.
Our program includes
com puterized cash letter analysis
... plus practical m ethods
fo r im proving proof operations
and check co lle ction .
Start us digging for those
p ro fits —call 314-425-2404.
We’re w ith you.
MERCnmilE
BRIX
Central Group, Banking Dept • Mercantile Trust Company N.A. • (314) 425-2404 • St. Louis, Mo. • Member F.D.I.C.
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
;
»
m BËËÊÊÊÈÊÊm
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Federal Reserve Bank of St. Louis
“MGIC gives us more D irectors’ & Officers’
liability coverage than any other insurer,
at a reasonable premium’.’
Did you analyze coverage
offered by a number of
D & O liability
companies?
Dale L. Jernberg,
Exec.V.P. and
Director, National
Bank of Washington,
D.C. tells how MGIC
provides coverage
for directors and
officers, plus an ex
clusive combination
of key features
tailored to a bank’s
needs.
“Yes. Four besides M G IC .
And very thoroughly. We
found th at types and quality
of coverage varied all over
the lot. B u t only M G IC
provided a complete protec
tion tailored to our bank’s
needs. And for a reasonable
cost.”
How do MGIC’s features
compare with the others?
“Their various plans, limits
of liability, and deductibles
offer extremely attractive
options. The $5 million
policy we have with M G IC
protects all directors and
officers. In any case covered,
it pays 100% over the
deductible limits we selected.
“Also, when we indemnify
to the extent permitted by
law, M G IC ’s coverage has
far fewer exclusions than
many other insurers. This
‘waiver of exclusions’ is
most important to us.
They also could advance
legal fees in the event of a
costly lawsuit which is
covered. And they would
cooperate with us to counter
unfavorable publicity that
could be damaging to the
named individuals and to
our bank.”
Do you find greater
awareness of your
specific needs and
greater flexibility in
MGIC’s D & O policy?
“Absolutely. The other
policies seemed pretty
general, and not tailored to
a bank’s needs. M G IC , on
the other hand, really
knows the financial com
munity, because they’re part
of it. This, coupled with
the fact th at they did their
‘homework’ before the initial
proposal, proved the key to
our decision. M G IC
thoroughly knew what we
needed and the result is a
very secure feeling that we
have the best D & O liability
insurance we could buy.”
“ In our judgment, M G IC ’s
D & O liability coverage is
by far the best value we
could buy. Other companies
ju st couldn’t provide us the
kind of protection that
M G IC offers.”
How do you feel about
your right to participate
in selection of counsel in
the event of a lawsuit?
“ I t is very important.
M G IC would give us a free
hand to choose counsel,
subject to their approval.
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
MGIC
Totally tailored
D & O liability protection.
And we mean total.
MGIC Indemnity Corporation
A Subsidiary of MGIC Investment Corp,
MGIC Plaza, Milwaukee, Wl 53201
The Banking Scene
By Dr. Lewis E. Davids
Hill Professor of Bank Management,
University of Missouri, Columbia
Is Credit Scoring Fully Understood?
OMPUTERS simplify credit scoring
through the use of statistical analy
ses. Today, many individuals are, para
doxically, alienated by the concept.
Groups that favor implementation of
credit scoring typically are bankers and
others concerned with repayments of
debts. They hold that credit scoring is
in the public interest. On the other
hand, a number of people, along with
many regulators, contend that the con
cept and implementation of credit scor
ing would be discriminatory.
C
" T h ro u g h . . . s ta tis tic a l
p ro ced u re , on e can a d ju s t
th e risk o f n o n p a y m e n t to
th e te r m s o f th e p r o b a b l e
cost o f c a p i t a l a n d th e in
te r e s t r a t e . . . A l e n d e r , e x
tend ing th e d e g r e e o f risk
he is w i ll i n g to a ccep t, could
m a k e m o r e lo a n s . . . "
Don’t misunderstand. The concept
of credit scoring is something many
bankers haven’t used formally. Basical
ly, it involves taking the type of infor
mation legally available to a lender
from the borrower’s application and,
by assigning different weights of cred
its to various parts of that application,
the lender is able to “score” the prob
ability of the loan being repaid.
To illustrate, it’s accepted that a per
son who has owned a house and has
worked for the same employer for a
number of years is a better risk than
an individual whose history shows that
he has lived in furnished rooms and
has had many jobs or layoffs in a short
time.
Credit scoring, in effect, could apply
all the “Cs” of credit in an objective
way.
10
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Federal Reserve Bank of St. Louis
Similarly, an insurance company
credit scores when issuing a life insur
ance policy: There are mortality dif
ferences among applicants based on
age; mortality differences based on
gender; and there also appears to be
a mortality difference based on race,
though this is a complex and frequently
misunderstood area.
For example, women—on the av
erag e -liv e longer than men. Women
are a better risk than men for life in
surance policies, but they are poorer
risks than men where annuities are con
cerned. Thus, the concept of adverse
selection occurs if there was no legiti
mate discrimination by gender in is
suing a life insurance policy or an an
nuity; women as a class would be
favored when purchasing annuities if
premiums were charged on the same
bases for both sexes of the same age,
but women would pay excessively high
rates if they paid the same amounts for
life insurance policies as did men, un
der similar conditions.
Of course, in life and business all
things rarely are equal, and life insur
ance companies and firms writing an
nuities consider other aspects on appli
cations. For example, a subject’s health
record. An insurance company, legiti
mately, doesn’t like to insure a person
who has had 10 strokes and uses a
pacemaker. People engaged in hazard
ous occupations—workers on high-rise
buildings for example— obviously have
greater exposure to accident than, say,
a clerk in a bank.
For many years, a major university
has made periodic studies of credit rat
ings by occupation. People in certain
occupations, it was found, consistently
were rated higher than others as hav
ing a good probability of paying thendebts. Some of this may be due to the
“natural selection” of the individual.
One personality type may choose to be
an actor, while another may become
an engineer.
There are certain industries which,
by their nature, are seasonal or highly
cyclical. Migratory workers don’t have
the stability of income that postal
workers do.
An interesting empirical feature of
credit scoring is the ownership of a
telephone. To an observer, a phone
might not be considered a significant
indicator of creditworthiness, but one
of the biggest credit-granting and -col
lecting agencies is the telephone com
pany! If a person hasn’t paid a phone
" The p re s id e n t o f th e P h il
a d e l p h i a Fed has n o te d t h a t
(e q u a l
c r e d it) r e g u la tio n s
m e a n t a n e s t im a t e d e x p e n s e
to s u r v e y e d s m a ll- a n d m e
d iu m -s iz e d b a n k s o f f r o m
1-2% in n e t incom e in 1 9 7 5 .
Those costs a r e th e e q u i v
a le n t o f a t lea s t one a d d i
t i o n a l w o r k e r on th e s ta ff o f
a s m a ll b a n k . . . "
bill in one locality and moves to anoth
er, it’s likely that “Ma Bell” wouldn’t
grant that person the use of another
phone. Credit scoring is doubly weight
ed where the telephone becomes a cri
terion in the scoring arrangement.
When both a husband’s and wife’s
name are on a credit, there is a better
chance of collecting than if there is but
one name. Carrying that a step further,
the old adage that “two can live more
cheaply than one” has a great deal of
merit for credit purposes, if less is
spent for housing by a married couple
than by two individuals living separate
ly, more funds would be available to
pay debts.
(Continued on p ag e 68)
MID-CONTINENT BANKER for August, 1976
HOW 10 AVOID
SLEEPLESS NIGHTS IN
THE BOND M ARKET.
r
United Missouri introduced its bond
Investment Accounting System in 1972.
Since then, we’ve added something.
Now, in addition to your IAS report,
we offer you a review of the report —an
analysis of your bond portfolio with
recommendations from our skilled bank
portfolio specialists.
So call us or send the coupon. It
doesn’t cost anything extra.
And it might save you some restless
nights.
Pat Thompson, Vice President
United Missouri Bank of Kansas City, N.A.
P. O. Box 226, Kansas City, Missouri 64141
(816) 221-6800
I would like someone to contact me about:
□ Bond Investment Accounting Systems
D Bond Portfolio Analysis
D Both of the above
|
|
Bank---------------------------------------------------------- Title_________________________
jj
Address_________________________________________
|
City . ...------------------------------State____________________ Zip________________
j
Telephone______________________________________________________________
|
10th and Grand * Kansas C ity, M issouri 64141 • 816-221-6800
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
J
Name__________________________________________________________________
UNITED MISSOURI BANK
OF KANSAS CITY, N.A.
MID-CONTINENT BANKER for August, 1976
]
EFTS
(E le c tro n ic F u n d s T ra n s fe r S y s te m s )
Off-Premise EFT Bill
Is Passed in Chicago;
Results in Lawsuits
CHICAGO—A new spate of lawsuits
resulted from the July 8 passage by the
Chicago City Council of the Chicago
Financial Services Ordinance. The or
dinance permits banks and S&Ls to op
erate six community offices apiece and
an unlimited number of off-premise
banking machines within city limits.
Almost as soon as passage of the or
dinance became known, Continental
Bank filed suit in Cook County Circuit
Court, asking that the ordinance be de
clared constitutional. The bank hoped
to forestall any litigation testing its
constitutionality. The suit also asks the
court to issue a permanent injunction
prohibiting State Banking Commission
er Richard K. Lignoul and his office
from interfering in any manner with
“the lawful activities of Continental
Bank as permitted by the ordinance.”
First National filed a similar suit, also
on July 8, and included Illinois Attor
ney General William J. Scott among
the defendants.
The following day, the Illinois Bank
ers Association filed suit in U. S. Dis
trict Court to have the new law de
clared unconstitutional, but that court
sent the IBA to a lower (Circuit) court.
As of press time, the association had not
filed suit in the latter court.
Despite passage of the new ordi
nance, both Continental Bank and First
National have indicated they don’t plan
to expand their off-premise banking
terminals. The ATMs they already have
installed will continue in operation be
cause of a decision last December by
U. S. District Court Judge Herbert L.
Will. He ruled that as long as the ma
chines perform only the following three
services, they could not be called
branches: accepting deposit from pres
ent customers; making cash withdraw
als and accepting payments on present
loans.
Last May, a three-judge panel of the
Seventh U. S. Court of Appeals re
versed Judge Will by ruling that offpremise banking terminals in Illinois
constitute branching and are, therefore,
illegal. The two banks have appealed
this decision to the U. S. Supreme
Court, which is in summer recess until
October 4. It’s only conjecture at this
time whether the High Court will even
hear the case or, if it does, just when
it will be heard. If it does, it probably
will be another two or three months
after this hearing before a decision is
handed down. The Supreme Court has
stayed the ban on the ATMs until it
decides whether it will rule on the case.
Bank's ATMs Ruled Branches,
Must Be Closed, Says Court
EFT N etw o rk Plans Proceed
CHICAGO— Although the Illinois
Bankers Association is trying to
block enforcement of the newly en
acted Chicago Financial Services
Ordinance (see adjacent story), the
IBA is going ahead with plans for
an E F T network, as announced at
its annual convention in St. Louis
last May. This network will be a
nonprofit corporation operating on
a cooperative basis, with member
banks called patrons. It will be open
to all Illinois commercial banks.
According to IBA Assistant Sec
retary Donald X. Murray, an EFTS
steering committee has been chosen,
and a sign-up campaign for mem
bers is set to start this month. As
Mr. Murray put it, the first objective
is to find out whether the public will
buy the E F T idea; then the steering
committee must make a study of the
hardware needed for E FTS and
what kind of enabling legislation
will have to be passed to make E F T
a reality in Illinois.
12
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ST. LOUIS—Lawyers for First Na
tional have not decided what further
action to take following the ruling July
20 by the U. S. Court of Appeals for
the Eighth Circuit that the bank’s offpremise automated teller machines are
branches. Thus, the ATMs are said to
violate Missouri’s branch-banking law
and must be shut down.
First National installed the ATMs at
two suburban locations—Emerson Elec
tric Co. and a food store— after the
Comptroller of the Currency, in De
cember, 1974, ruled that such devices
were not branches and could be in
stalled by nationally chartered banks.
However, State Banking Commissioner
William Kostman filed suit charging
that the ATMs are branches and do
violate state law. U. S. District Judge
James Meredith ruled last November
that they are branches and must be dis
continued. The bank then filed an ap
peal from this decision, and last month’s
ruling came as a result of this appeal.
Discussing d e v e lo p m e n ts in EFT a n d a u to m a te d
c e n tra l in fo rm a tio n file system s d u rin g "U s e r
S e m in a r" o f A m e ric a n N a t'l, C h a tta n o o g a , a re
(fro m I.) Phil H a rv e y , v .p ., n a t'l corr. d iv .; N e d
B e nder, ch. & pres., N a t'l B ank, B o az, A la .;
Jim G o o d n e r, e .v .p ., host b a n k a d m in , d iv .;
a n d Ben Pu rser, pres., D a y to n (T en n .) Trust.
Bank Reps See Services
In EFT "User Seminar"
CHATTANOOGA— Area bank man
agement personnel were able to get
first-hand looks at many new services
provided by E F T and automated cen
tral information file systems during a
“User Seminar” sponsored by American
National.
The seminar was one of a series of
meetings designed to evaluate the use
fulness of automated bank operational
programs for customers of American
National’s data operation center. On
hand were representatives of 18 banks
in southeast Tennessee, north Alabama
and north Georgia.
'G rad School of EFTS' Slated
For A tla n ta August 15-20
ATLANTA—The “Graduate School
of E F T S ” will be held here August 1520 .
The five-day curriculum devoted to
developments in E FT S will be spon
sored by Payment Systems, Inc. (P S I),
which is headquartered in New York
City, and by Georgia State University.
The school is designed to broaden
the understanding of financial institu
tion executives and managers on E F T
concepts and issues. Courses will cover
ATMs, ACH developments, POS sys
tems, E F T S laws and regulations, mar
keting E F T S services and E FT S tech
nology and economics.
On hand will be experts on the topic
from the PSI staff and Georgia State.
Authorities on various aspects of E F T S
activity also will speak.
Formal classroom presentations, question-and-answer sessions for faculty
and students and small group interac
tive sessions focusing on E F T S prob
lem-solving will be used. Enrollment
has been limited to 60 participants.
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BAN K
of
A M E R IC A
Correspondent Bank Service
BANKING WORLD
THOM AS
SNEED
• William J. Thomas, president, Na
tional Stock Yards National, National
City, 111., observed his 50th anniversary
with the bank July 28. He began his
career as a mail boy, progressed
through every operating department
and advanced to the correspondent di
vision, where he was a traveling of
ficer. A director of the bank since 1951,
Mr. Thomas became president in 1961.
• Charles M. Bliss was elected presi
dent, liarris Trust, Chicago, last month,
succeeding Chalkley J. Hambleton, who
was made vice chairman. Mr. Hamble
ton remains president, Harris Bankcorp., Inc., HC of Harris Trust. In
other action at the bank, Senior Vice
President B. Kenneth West was named
head of the banking department, suc
ceeding Mr. Bliss. Mr. West formerly
was group executive, international
banking group, a post to which Senior
Vice President Edward K. Banker has
been named. Mr. Banker was deputy
executive of that group. William F.
Murray continues as chairman and
CEO of both the HC and bank.
• William H. Bowen, president and
CEO, Commercial National, Little
Rock, has received the Distinguished
Alumni Citation of the University of
Arkansas. In addition, Mr. Bowen has
taught what reportedly was the first
course on banking ethics in the history
of the Stonier Graduate School of
Banking, Rutgers University, New
S W E A R IN G E N
14
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
STRICKLAN D
MILLER
BANKER
BLISS
W EST
Brunswick, N. J. His speech, "The
Watergate Bank, N. A.,” presented spe
cific facts involving insider dealings
and payoffs on the part of bank officers.
Also examined were instances of exces
sive entertainment and/or bribes in the
pursuit of bank business.
ister Takeo Miki. Also chosen was Ken
neth E. Johnson, chairman, Kansas
State, Wichita. The group spent an
hour visiting with the prime minister
about opportunities for increased trade
and investments between Japan and
the represented states.
• Donald C. Miller has been elect
ed vice chairman of Continental Illinois
Corp. and its principal subsidiary, Con
tinental Illinois National, both of Chi
cago. This action follows Mr. Miller’s
promotion to the HC’s corporate office,
where he joined Chairman Roger E.
Anderson and President John H. Per
kins in the senior management group.
In his new posts, Mr. Miller will have
increased general management respon
sibility for the bank and HC. He for
merly held the title of executive vice
president and continues as the HC’s
chief financial officer and treasurer. He
joined Continental Illinois National in
1958.
• Eugene L. Swearingen, chairman
and CEO, Bank of Oklahoma, Tulsa,
has been appointed dean for bankers,
Southwestern Graduate
School of
Banking (S W IG S B IE ), Southern Meth
odist University, Dallas. As dean for
bankers, Mr. Swearingen will serve a
three-year term. During that time,
he also will be chairman of the
SW IG SBIE board and an executive
committee member. He joined his bank
as president in 1968.
• Gerard V. Carey, chairman and
president, First Pennsylvania Bank and
First Pennsylvania Corp., both of Phil
adelphia, has been elected chairman,
Bank Administration Institute, which
is headquartered in Park Ridge, 111. He
succeeds George W. Dennis, senior
vice president, Manufacturers Hanover
Trust, New York City, who continues
for one year on the BAI board as im
mediate past chairman. In his new
post, Mr. Carey will guide BAI policy
making decisions, serving as the
group’s spokesman in the financial com
munity. He previously was chairman,
BAI Bank HC Commission, and vice
chairman of the board. He joined his
bank in 1965.
• Earl Sneed, president, Liberty
National Corp., Oklahoma City, was
selected as a business representative
from the Midwest to meet in San Fran
cisco July 1 with Japanese Prime Min-
• Robert Strickland was elected
president, Trust Co. of Georgia, At
lanta-based bank HC, last month. Mr.
Strickland continues as chairman, Trust
Co. Bank, Atlanta, lead bank in the
state-wide banking organization. A. H.
Sterne, formerly chairman and presi
dent of the HC, continues as chairman.
Mr. Strickland has been with the group
since 1948.
• BankAmerica Corp., San Fran
cisco, has applied to list its common
shares on the Pacific and Midwest
Stock exchanges. The company’s stock
was approved for listing on the New
York Stock Exchange June 15.
CA REY
MID-CONTINENT BANKER for August, 1976
;■
::
Lynn Edwards, Asst. Vice President; Ron Murray, Sr. Vice President
Through the International Department of The First you can provide your
customers with the services they want and need wherever they go. We can
purchase checks which are payable in foreign currencies at a competitive
buying rate as well as issue foreign drafts, mail or cable transfers to most
parts of the world. We will purchase foreign currency at our current buying
irate and, in most cases, credit your account that day. We maintain an
inventory of the most popular currencies and can obtain practically any
currency that you may need. In addition, we can provide a letter of credit
wherever needed.
Wherever in the world you need banking services, call us, Lynn Edwards,
International Department, (405) 272-4287 or Ron Murray iin The First's
Correspondent Bank Department, (405) 272-4093.
You're not
alone.
« 5*
strongest.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
THE
You've got
F IR S T
The First.
NATII0NA1 BANK A.N0 TRUST COMPANY
O f OKLAHOMA CITY
OVER $85,000,000 CAPITAL STRUCTURE/MEMBER F.D.I.C.
A SUBSIDIARY OF FIRST OKLAHOMA BA INCORPORATION, INC.
O p e ra tio n s
LEFT:
Larry
B ro w n
(I.)
ta k e s
first
step
in
o p e ra tin g
Encore
3000
LM
m a il-o p e n in g e q u ip m e n t b y lo a d in g m a g a z in e jo g g e r. Looking on a re
C h arles E. B e n kert (c.), o p e ra tio n s officer, a n d W a lte r L. Scaggs, a .v .p .
E n velo pe con ten ts a re se ttle d to b o tto m b y jo g g in g actio n o f m a g a
zine, a n d en v e lo p e s then a r e m o v e d in d iv id u a lly in to system . CENTER:
This is close-up v ie w o f m a g a z in e jo g g e r w ith tu b e lik e " a r m " th a t
pulls each
e n v e lo p e
to end o f system
tra s h c o n veyo r.
and
In B a n k 's Lock B ox S ystem :
O perating, Personnel Costs Can Be Cut
W ith Autom ated M a il-O p e n in g System
r V HE TIG H T MONEY MARKET of
the last 10 or 15 years has caused
corporate treasurers to become increas
ingly interested in “cash acceleration,’
that is, in getting funds due their firms
into their bank accounts and available
for use as working capital as quickly as
possible. That is why the lock box sys
tem is an important service for banks’
commercial customers.
The lock box system works like this:
A firm will contract with a bank for
the latter to go to the post office and
pick up payments mailed to it, then
open this mail and credit the funds di
Encore 3 0 0 0
LM m a il-o p e n in g
system
in s ta lle d
rectly to the firm's account at the bank.
After processing the checks, the bank
will send those drawn on other banks
to the appropriate banks. The bank will
make mail pickups at scheduled times
around the clock— even between mid
night and dawn—so that there is a con
stant flow of money into a lock box cus
tomer’s account. Under this program, a
firm has use of its customer’s payments
by at least a day, and sometimes sev
eral days, earlier than if it waited for
delivery by the conventional mail sys
tem.
Sometimes a firm with offices in
e a r ly
this y e a r
at
St.
Louis' M e rc a n tile
sh o w n in o p e ra tio n . In b a c k g ro u n d a re C h a rle s E. B e n kert (I.), o p e ra tio n s officer, a n d
L. Scaggs (r.), a .v .p . N e w e q u ip m e n t is p ro d u c t o f Stephens In d u stries , Inc., L en exa, Kan.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a lo n g .
R IG HT:
A fte r
e n v e lo p e s
a re
o p e n e d , th e y
a re in d e x e d by t r a y co n v e y e r to o p e ra to r s tatio n s, w h e r e contents
a re processed. Lights m o u n te d on o v e rh e a d ta b le a t cen ter illu m in a te
t r a y c o n veyo r. Processed en v e lo p e s , w ith contents re m o v e d , a re m o v e d
Trust is
W a lte r
disposed
o f a u to m a tic a lly
by
Encore
3000
LM
more than one city or with branches
across the U. S. will have lock box
service at banks in various sections of
the country. For instance, a company
headquartered in New Jersey may have
its midwestern customers make their
payments to a bank in the Midwest via
a lock box number. The bank can
process these payments and make the
funds available to the New Jersey firm
much earlier than if the payments were
mailed from the Midwest to New Jer
sey.
Banks that offer lock box service re
quire special staffing. They must have
messengers to go to the post office
around the clock, employees to staff
their lock box departments for three
shifts seven days a week and equip
ment that will stand up under con
stant usage with a minimum amount of
down time.
Mercantile Trust in St. Louis (the
lead bank of Mercantile Bancorp.) has
what is described as one of the largest
lock box systems west of the Missis
sippi River. Assistant Vice President
Walter L. Scaggs states that they will
process approximately eight million
pieces of mail this year for over 300
lock box customers located nationwide.
This volume is handled so efficiently
that it requires a permanent staff of
only 55 employees. During peak work
loads, qualified temporary help is ob
tained on an as-needed basis.
The Mercantile lock box department
is in operation 24 hours a day, seven
days a week every day of the year ex
cept Christmas.
Pickups are made at St. Louis’ Main
Post Office 16 times on Monday, 18
times daily Tuesday through Friday,
(Continued on p ag e 80)
THESE GUYS WON’T
LEAVE WELL ENOUGH
Joe Blank, Mike Miller and Ron Deal. It
seems they have a couple of key phrases that
work consistently well. For us, ana our corre
spondent banking friends.
They go like this: W hat if? Why don’t wer
Why not try this? (and) I wonder why nobody
else thought of that?
W e didn’t get to be the largest bank in the
state by offering you the same tired solutions
over and over again. W e keep it loose. Because
every bank, and every banking problem, are
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
unique. And we’re flexible enough to find the
best solution for you. Because we’ve got people
who won’t leave well enough alone. Call us toll
free. In Tennessee, T 8 0 0 -3 4 2 -8 2 4 0 . In other
states, 1 -8 0 0 -2 5 1 -8 5 1 4 .
First
A m erican
First American Center, Nashville 37237
F irs tA m te n n B a n k g ro u p
Member FDIC
17
NEWS ROUNDUP
News From Around the Nation
Window Borrowing Eased?
The Fed has proposed liberalizing its borrowing regula
tions to help banks, particularly smaller ones, weather
large seasonal loan demand or deposit fluctuations.
Among the proposed changes is one governing borrow
ing at the 12 Fed regional banks, which would allow
member banks to be eligible for seasonal credit even when
they maintain a portion of their liquid assets in Fed
funds, so long as such holdings conform to the bank’s
normal operating experiences.
Previously, the Fed’s discount window was not available
to such banks if they chose to hold Fed funds.
The proposal also would implement other liberalizations
of seasonal borrowing regulations.
Under current rules, a bank qualifies for seasonal bor
rowing assistance if its need for funds in the peak season
exceeds 5% of average total deposits in the preceding year.
The new proposal lowers this to 4% of the first $100 mil
lion of deposits; 7% of the second $100 million and 10%
of any deposits over $200 million.
Also, in computing eligibility for seasonal assistance, the
Fed proposal would reduce to four from eight weeks the
minimum period during which the seasonal need must be
evident.
Consumer Credit Guard Bill Backed
The ABA has gone on record supporting legislation that
would restore states’ powers to protect consumers’ rights
in credit purchases and remove much of the confusion be
setting businesses and banks.
The legislation would reverse a recent FTC ruling that
resulted in abolition of the holder-in-due-course doctrine,
making banks and other consumer finance organizations
equally liable with dealers and merchants for ensuring
purchasers’ satisfaction with their merchandise.
ABA has noted that, as a result of the F T C ’s ruling,
some banks have had to cut back on buying credit con
tracts from businesses.
The Consumer Loan Contracts Act of 1976 is spon
sored by Senators Jake Gam (R.,U tah), Robert Morgan
(D .,N .C .), John Sparkman (D.,Ala.) and John Tower
(R .,T e x .).
Consumer Leasing Rules Proposed
Regulations to implement the Consumer Leasing Act of
1976 have been proposed by the Fed. The act requires
disclosure of leasing costs to consumers.
The disclosures required should make it possible for
the consumer to compare the total cost of leasing a prop
erty with the total cost of buying the item. It would also
let customers know whether they will owe anything ad
ditional at the end of the lease term.
18
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Most of the amendments proposed are technical and
merely implement statutory language. Comments can be
made through August 16.
The regulations require, in open-end leases, a statement
of certain limitations placed on the liability of the lessee
at the end of the lease term, and notice that the consumer
may have the leased property appraised as part of the
process of determining final liability.
The leasing act established a rebuttable presumption
that the liability could not exceed three monthly pay
ments. The presumption can be overturned only by a suc
cessful lawsuit, in which case the consumer would have to
pay the lessee’s attorney fees, according to the Fed.
Variable Rate CD Gets Support
About three-fourths of the comments received by the
FD IC on instituting a variable rate time certificate for
savers have been favorable, the agency has reported.
Some opposition was voiced by smaller banks that fear
the higher cost of money the plan would entail during
tight money periods. Some consumers and individuals sug
gested higher minimum interest rates and lower maturities
on the certificates.
The variable certificate would permit banks and thrifts
to offer savers a fluctuating interest rate certificate that
could be used to stem deposit runoffs during high interest
rate periods.
The proposal would set a minimum interest rate of 412%
on the note. Interest rate increases would be based on
fluctuations in the coupon issue equivalent of three-month
Treasury bills.
FD IC economists say the variable certificates would
probably be cheaper for financial institutions over an in
terest rate cycle than fixed rate four- and six-year certifi
cates now being offered.
Accounting Committee Set Up
Six banking organizations have announced the formation
of the Inter-Association Committee on Bank Accounting,
reflecting an industrywide concern over the growing num
ber and complexity of proposed changes in bank account
ing and reporting procedures.
Purpose of the committee is to analyze proposals issued
by the Financial Accounting Standards Board, American
Institute of CPAs, the SEC and federal bank supervisors;
to provide each group’s membership with information on
new accounting concepts affecting banks and HCs in the
long term; to coordinate the efforts of the participating
organizations to ensure that individual responses are based
on current technical data and reflect broad industry ob
jectives; and maintain communications with other inter
ested parties.
Representatives on the committee are ABA, BAI, As
sociation of Bank HCs, Association of Reserve City Bank
ers, Robert Morris Associates and the New York CHA.
MID-CONTINENT BANKER for August, 1976
From then to now we've
planned and built or remodeled
more bank buildings than
any other company anywhere.
Since our beginning in 1913, when we
were known as the St. Louis Bank Fixture
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concepts and methods that are now
banking standards. W e were instrumental
in the demise of tellers’ cages. W e “opened
up” bank lobbies. W e introduced drive-in
banking. W e have developed a revolu
tionary concept in preplanned bank
buildings. And on m ore than 6000 projects
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through proper planning, design and
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C ity , S ta te and Z ip
V
MID-CONTINENT BANKER for August, 1 9 7 6
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
- J
19
Selling /Marketing
Time Capsules fo r 2 0 7 6 and 2176 Sealed
To Celebrate Bank s 7 5 th Anniversary
HEN Citizens National, Bowling
Green, Ky., observed its 75th an
niversary last month, it held a unique
celebration that will be recalled even
two centuries from now. Why? Because
the bank chose a time-capsule-sealing
ceremony to commemorate the event.
The bank also tied in the nation’s bi
centennial with the celebration.
About six months before the July 1st
anniversary, Citizens National began
asking area residents to sign papers
that would be placed in two time cap
sules—one to be opened July 1, 2076,
and the other July 1, 2176. In addi
tion, the bank gathered messages and
contributions from around the country,
including a booklet from the White
House in Washington, D. C., about the
White House. National publications
such as L ife, Fortune and Tim e sent
their bicentennial issues. Also repre
sented were Sports Illustrated and
W
T w o tim e capsules w e r e sea led on g ro u n d s
o f C itizen s N a t'l, B o w lin g G re en , a n d a r e
g u a rd e d
by this stone.
B ank
officers
M a in
O ffice
G re en ,
w a tc h e d
Ky.
p r e p a re
lo b b y
In
capsules fo r
of
C itizen s
fo re g ro u n d
these a ctivitie s.
20
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
a re
sea lin g
N a t'l,
in
B o w lin g
visitors
w ho
a program that included appearances
by the Bowling Green mayor and other
dignitaries, followed by the blessing
and sealing of the capsules and the
breaking of the keys to them.
The success of this unusual program
can be summed up in the remark of an
enthusiastic 17-year-old boy whose sig
nature was in the capsules: ‘‘Hey, I ’m
a part of history 200 years from now!”
A 'Hit':
’M obile’ M obile Custom ers
Like Late Banking Hours
C itizen s N a t'l P residen t John Hines looks a t
b o o k le t co n trib u te d b y W h ite House fo r sea lin g
in tim e capsules. S e a lin g w a s c lim a x o f b a n k 's
7 5 th -a n n iv e r s a r y c e le b ra tio n .
P eople. Commentator Paul Harvey sub
mitted a book, “Our Lives, Our For
tunes, Our Sacred Honor,” and includ
ed a picture and handwritten note to
the people of 2076.
Barry Bingham Jr., editor and pub
lisher, Louisville Courier-Journal and
Louisville Times, created special letters
for both time capsules. Harold H.
Helm, chairman, directors advisory
committee, Chemical Bank, New York
City, also sent a special letter. The
Park City Daily N ew s supplied special
editions, as did Advertising Age. M i d C o n t in e n t B a n k er
was honored to
contribute a special bicentennial plans
edition and an outlook issue.
U. S. Senator Wendell H. Ford made
special tapes for the capsules, and
Congressman Bill Natcher furnished a
pictorial history of the capitol, a letter,
a copy of the Congressional R ecord of
April 27, 1976, and other items. The
Bowling Green Chamber of Commerce
also was represented. A tape of the
Kentucky Derby and samples of TV
and radio programs were placed in the
capsules.
Finally, what may be the longestterm trust agreement was placed in
them. This agreement names Citizens
National as trustee and the First Bap
tist Church of Bowling Green as bene
ficiary of an irrevocable trust agree
ment for 2076 and 2176.
At the big bicentennial-anniversary
celebration July 1, the bank sponsored
Mobile citizens of Mobile, Ala., like
the night-time hours of First National.
The bank keeps two of its 14 locations
open until midnight Monday through
Friday for drive-up customers.
First National’s Springdale Mall
Branch is open five nights weeklv until
8:30.
The bank’s Skyline Branch is
equipped with Mosler Pneu Vista 800s
in a head-on configuration, serving four
lanes of traffic. At the Office Park
Branch, six lanes are in operation.
At the Springdale Plaza location,
three tellers operate five of the Pneu
Vista 800 units.
According to the bank’s vice presi
dent, James E. Pollard, response to the
night hours has been great. “The two
branches we have open until midnight
are located so they conveniently serve
Mobile drive-up traffic, while the mall
location has proved popular with shop
pers as well as drivers,” he said.
Texas N a t'l Celebrates 90th Year
T ex as
N a t'l,
W aco,
held
a
b ir th d a y
p a r ty
in
its lo b b y to m a rk its 9 0 th y e a r. T a k in g p a r t
in th e e v e n t w e r e th re e b a n k custom ers w h o
w e r e as old as th e in stitu tio n : K a th rin e O liv e r
(I.), I. T. Jones (2n d fro m r.) a n d Eva Coston
(r.). A c tin g as hosts w e r e M a r le n e S p rin g e r
(2 n d fro m I.), Pres. H e rm a n C o le m a n (re a r )
a n d Louise Sp oede (3 rd fro m r.).
MID-CONTINENT BANKER for August, 1976
Beauty,
security
and value
LeFebure
7 0 0 0 Series
Vault Door
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Here’s rich, distinctive styling that will complement your
interior design. The clean dramatic beauty will have your
customers taking a second look . . . they’ll be impressed.
Y ou’ll be impressed, too, with the design features. Door
security thicknesses of 3 W , 7" and 10" are available. The
entire face of the door provides torch protection. There is also
Monolithiguard® torch and drill protection over the complete
locking mechanism. The stylish gate assures security . . . may
be opened by authorized personnel only. Yet, you enjoy the
feeling of hospitable openness.
The positive-release time lock assures safe and easy
operation. All controls are concealed behind an attractive
stainless steel service door.
Talk with your LeFebure Sales Engineer. He will fill you in
on many more features. Installations are individually tailored to
your needs by LeFebure’s own service and engineering
specialists.
LeFeb u re
Division of Walter Kidde & Company, Inc.
Cedar Rapids, Iowa 52406
We make more of the things you need than anyone else in the world.
Know HowlA nd plenty of it.
Archie W. Luckie
Vice President
John P. Tetzelli
Vice President
When it comes to doing
business abroad, a lot depends
on who you know. And how
much they know.
These First National
Bankers are part of one of the
most experienced international
banking teams in the entire
Southeast.
After all, First National
has been involved in banking
Tony Van Aken
International Officer
on a worldwide basis since 1866.
T h at’s longer than anyone else
in the South.
So get to know them.
And you’ll have all the financial
know how you need behind you.
Cable Address:
“Firstbank,” Telex 5 0 5 4 0 0 or
call Toll Free 1-800-672-6709.
Or write Post Office Drawer
1 4 6 7 ,3 6 6 2 1 .
_ International Department
( f First National Bank of Mobile
Established 1866 A First Bancgroup—Alabama, Inc. Affiliate. Member FDIC.
22
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for August, 1976
How Big-City Correspondent Banks
Assist Downstream Customers
In Three Important Areas
Assistance Cements Relationships; Benefits A ll Concerned
Agriculture
International
Development
RIMARY aim of big-city banks of
OWNSTREAM correspondents are
UNDREDS of downstream corre
fering industrial development as
P
spondent banks are calling on D finding that they no longer have
H
sistance
to downstream correspondents
to
shun
international
banking
business
their big-city counterparts for assist
ance in financing the inflation-ridden
farm economy. This assistance comes
in many forms and it is responsible for
the efficient and productive rural enter
prises that provide the nation-—and the
world—with foodstuffs and related
products.
The importance of these correspon
dent relationships is being emphasized
by bankers. Ray Miltz, vice president
for regional banking at First National,
Tulsa, puts it this way: “Banking with
out correspondent banking relation
ships would be like putting our finan
cial community and economy back in
the horse and buggy days.”
How are big-city correspondent
banks assisting their downstream cus
tomers? Following is a brief description
of correspondent activities in the ag
area:
because they now can usually call on
their regular big-city correspondent for
assistance. Time was when they would
have had to contact a bank in a coastal
city for assistance.
Regional big-city correspondents are
initiating or beefing up their interna
tional departments because of the surge
of banking activity in that area.
Following are presentations by nu
merous banks, many of which cite ex
amples of how they are assisting down
stream correspondents in this fast
growing area.
is to help the correspondents and thencommunities grow in size and vitality,
thereby enriching the economic climate
of the area and the state.
What do the regional banks get out
of this service? Strengthened ties with
correspondents,
more participations
with correspondents and the servicing
of major accounts on a national basis.
In the following paragraphs, various
big-city banks report on the scope of
their industrial development activities.
• First National, Amarillo, Tex.
Vice President Don Beasley reports
that the bank might be advised by a
seasoned correspondent banker that he
has a customer whose credit require
ments are in excess of the amount his
bank can provide. Subsequent discus
sion would center around the credibili-
• Citizens & Southern National, At
lanta, is called upon to provide inter
national expertise, as the following in
stance illustrates:
A Louisiana firm was requested to
supply winches to a Norwegian com
pany that was building a vessel in
Yugoslavia. The Norwegian firm was
unknown to the winch supplier, whose
prior sales had all been within the
U. S. In addition, the company from
Norway asked for two-year repayment
terms and wanted the winches shipped
directly to Yugoslavia.
The local firm wanted the sale and
• Central Bancshares of the South,
HC headquartered in Birmingham,
Ala., has implemented a Community
Assistance Program (CAP) designed to
help communities match available fed
eral grants with their needs. The ser
vice is offered through HC affiliate
banks in Alabama and correspondent
banks located in adjacent states.
CAP will also help develop research
data, push applications through bu
reaucratic and political channels and
allocate costs to maximize federal fund
ing.
According to Len B. Shannon, senior
vice president in charge of marketing
for the HC, every year billions of dol-
(Continued on page 30)
(Continued on page 38)
(Continued on page 60)
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
23
Incorporation:
Is It the Solution
To Farm ers’
Estate- Tax Problems?
R ecent articles in the popular press
have given the impression that the so
lution to farm ers’ estate-tax problem s
is to incorporate the fam ily farm. W hile
the corporate form o f ow nership often
is used as a m eans o f sim plifying trans
fe r o f the farm from one generation to
th e next, incorporation alone will not
redu ce potential estate taxes. In fact,
corporate ow nership can result in high
er incom e taxes in som e situations.
Thus, changing a farm ’s business orga
nization from a sole proprietorship or
partnership to a corporation should b e
ap p roach ed only after serious consider
ation, and never without the advice o f
legal counsel. Incorporation should b e
recogn ized fo r w hat it is: one o f several
tools useful in the m anagem ent o f the
farm business and a form o f ow nership
conducive to easy transfer o f assets to
sons an d daughters.
The follow ing excerpts from Estate
Planning for Farmers, by ]. W. L oon
ey, describe som e o f the w ays incor
poration o f the farm can aid in estate
planning.*
FAR, the greatest number of
D American farms are operated sole
ly by the owner. In many cases, the
owner will employ additional help, ei
ther on a full-time or part-time basis,
but the business operation itself con
tinues to be under the exclusive control
and management of the owner. The
sole owner obtains all the profits of the
business and must bear any losses that
may occur. For many farm families,
this is the ideal type of business ar
rangement. Other families are finding
it’s advantageous to operate either un
der a partnership or a corporate struc
ture or to use a leasing arrangement to
* Excerpted from Estate Planning for Farmers by
T. W. Looney, published by Doane Agricultural
Service, Inc., 275 pages, $7.95. Copyright 1976
Doane Agricultural Service, Inc., 8900 Man
chester Road, St. Louis, MO 63144.
24
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
assist younger family members in be
coming involved in the business.
Use of the corporate form of owner
ship by farmers has increased in recent
years. Although the corporate structure
has long been used in other businesses,
incorporation of the family farm is a
relatively new development. The pri
mary reason for its adaptation to the
farm scene is increased awareness
among farmers of the consequences of
federal estate taxes.
The federal estate tax is a tax im
posed on the transfer of property at
death. It is payable from assets of the
deceased’s estate and is levied on the
fair market value of all property con
sidered to be in the deceased’s estate
at the time of death. The tax is pro
gressive and graduated, currently rang
ing from 3%, if the net estate after all
deductions and exemptions is less than
$5,000, up to a rate of 77% on that por
tion of the estate that exceeds $10,000 , 000 .
Federal estate tax legislation was
first enacted for two purposes: 1. To
raise additional revenue for the federal
government. 2. To limit the wealth
that any one family could accumulate.
Accomplishment of these purposes is
doubtful. While the total dollar figure
raised in revenue from estate taxation
is substantial, it is small compared with
other forms of tax revenue, and the
tax has not been very successful in ac
complishing the goals of those with a
philosophy toward limiting accumula
tion of wealth. In fact, the wealthy
have been most astute in using tax
planning techniques to reduce the im
pact of this legislation. In today’s so
ciety, the tax has a much greater effect
on those considered middle income—
particularly farmers— because the tax
can easily be imposed on land holdings.
When the federal estate tax was en
acted, it applied only to the wealthy.
Present rates and present exemptions
have been in effect since 1942. At that
time, farmland had only a fraction of
its present value. Since land makes up
a major portion of the estates of most
farmers, there were very few farmers
who were faced with estate-planning
problems due to taxation in the early
years.
Today the situation is much differ
ent. Farmland value has skyrocketed
because of demand for land and be
cause of inflation. This means that farm
estates that would not have been large
enough to qualify for estate taxation
a few years ago may now be subject
to a considerable amount of tax at the
time of the owner’s death.
Often, farmers who bought their
land when it was relatively inexpensive
or inherited it from their parents 30 or
40 years ago will say, “I don’t have to
worry about estate taxes because my
land didn’t cost me anything.” This is
not the case because the federal tax
rates are applied to current fair market
value, not to what the land originally
cost or to the value it had at some prior
time. The fair market value today is
likely to be considerably higher than
it was 10, 20 or 30 years ago.
In the 10-year period between
March, 1967, and February, 1976, dol-
At press-time, both the United
States Senate and House of Rep
resentatives are considering pro
posed amendments in the Federal
Estate Tax and Gift Tax laws. If
passed, these amendments would
raise the current $60,000 estate-tax
exemption, match gift-tax rates with
estate-tax rates and increase the
marital deduction.
MID-CONTINENT BANKER for Aueust. 1976
" In m a n y e s ta te s , th e r e a l
effect o f th e . . . f e d e r a l es
t a t e t a x comes, no t a t th e
d e a t h o f th e first spouse, b u t
FEDERAL ESTATE TAX RATES
If taxable estate
(after deducting
$60,000 exemption)
is more than:
0
$ 5 ,0 0 0
1 0 ,00 0
2 0 ,0 0 0
3 0 ,0 0 0
$ 5 ,0 0 0
1 0 ,00 0
2 0 ,0 0 0
3 0 ,0 0 0
4 0 ,0 0 0
0
$150
500
1 ,600
3 ,0 0 0
+ 3%
+ 7%
+ 11%
+ 14%
+ 18%
0
$ 5 ,0 0 0
1 0 ,00 0
2 0 ,0 0 0
3 0 ,0 0 0
4 0 ,0 0 0
5 0 ,0 0 0
6 0 ,0 0 0
1 0 0 ,0 0 0
2 5 0 ,0 0 0
5 0 ,0 0 0
6 0 ,0 0 0
1 0 0 ,0 0 0
2 5 0 ,0 0 0
5 0 0 ,0 0 0
4 ,8 0 0
7 ,0 0 0
9 ,5 0 0
2 0 ,7 0 0
6 5 ,7 0 0
+22%
+ 25%
+ 28%
+30%
+32%
4 0 ,0 0 0
5 0 ,0 0 0
6 0 ,0 0 0
1 0 0 ,0 0 0
2 5 0 ,0 0 0
5 0 0 ,0 0 0
7 5 0 ,0 0 0
1 ,0 0 0 ,0 0 0
1 ,2 5 0 ,0 0 0
1 ,5 0 0 ,0 0 0
7 5 0 ,0 0 0
1 ,0 0 0 ,0 0 0
1 ,2 5 0 ,0 0 0
1 ,5 0 0 ,0 0 0
2 ,0 0 0 ,0 0 0
1 4 5 ,7 0 0
2 3 3 ,2 0 0
3 2 5 ,7 0 0
4 2 3 ,2 0 0
5 2 8 ,2 0 0
+ 35%
+37%
+ 39%
+42%
+45%
5 0 0 ,0 0 0
7 5 0 ,0 0 0
1 ,0 0 0 ,0 0 0
1 ,2 5 0 ,0 0 0
1 ,5 0 0 ,0 0 0
2 ,0 0 0 ,0 0 0
2 ,5 0 0 ,0 0 0
3 ,0 0 0 ,0 0 0
3 ,5 0 0 ,0 0 0
4 ,0 0 0 ,0 0 0
2 ,5 0 0 ,0 0 0
3 ,0 0 0 ,0 0 0
3 ,5 0 0 ,0 0 0
4 ,0 0 0 ,0 0 0
5 ,0 0 0 ,0 0 0
7 5 3 ,2 0 0
9 9 8 ,2 0 0
1 ,2 6 3 ,2 0 0
1 ,5 4 3 ,2 0 0
1 ,8 3 8 ,2 0 0
+49%
+ 53%
+ 56%
+59%
+63%
2 ,0 0 0 ,0 0 0
2 ,5 0 0 ,0 0 0
3 ,0 0 0 ,0 0 0
3 ,5 0 0 ,0 0 0
4 ,0 0 0 ,0 0 0
5 ,0 0 0 ,0 0 0
6 ,0 0 0 ,0 0 0
7 ,0 0 0 ,0 0 0
8 ,0 0 0 ,0 0 0
1 0 ,0 0 0 ,0 0 0
6 ,0 0 0 ,0 0 0
7 ,0 0 0 ,0 0 0
8 ,0 0 0 ,0 0 0
1 0 ,0 0 0 ,0 0 0
2 ,4 6 8 ,2 0 0
3 ,1 3 8 ,2 0 0
3 ,8 3 8 ,2 0 0
4 ,5 6 8 ,2 0 0
6 ,0 8 8 ,2 0 0
+67%
+70%
+73%
+ 76%
+ 77%
5 ,0 0 0 ,0 0 0
6 ,0 0 0 ,0 0 0
7 ,0 0 0 ,0 0 0
8 ,0 0 0 ,0 0 0
1 0 ,0 0 0 ,0 0 0
a t th e d e a t h o f th e s u r v i v o r . "
lar value of farmland in the United
States increased 244%.
The average value of farmland in Il
linois as of February 1, 1976, was
$1,184; Iowa, Indiana and Ohio
weren’t far behind. That places the
value of an average 640-acre Corn Belt
farm in the neighborhood of threequarters of a million dollars! Some
quick arithmetic using the adjoining
federal estate tax table gives a rough
approximation of the tax bill when the
landowner dies.
Even assuming the best use of the
marital deduction, which would reduce
the estate by one-half if that amount
or more passed to a surviving spouse,
and deducting costs of probate and
funeral, and applying the current $60,000 exemption, federal estate taxes
would be in the neighborhood of $75,000. Probate expenses, state inheri
tance or estate taxes and other expenses
would place the sum close to $100,000!
Most farmers don’t have that kind of
liquidity.
In many estates, the real effect of the
imposition of the federal estate tax
comes, not at the death of the first
spouse, but at the death of the sur
vivor. In the situation where all the
property is transferred from one spouse
to the surviving spouse, the total effect
of the tax can be devastating. The
marital deduction is not available on
the death of the surviving spouse to
help reduce the size of the taxable es
tate—and the progressive estate tax
rate takes an even bigger bite.
Estate Reduction. The potential ef
fect of federal estate taxes (as well as
probate and other expenses of dying)
is the principal reason why farmers and
others with substantial assets choose
to place these assets in the hands of
their potential heirs by making gifts
during lifetime. Property passed by
will, joint tenancy, life insurance pro
ceeds (if the deceased owned or had
certain incidence of ownership regard
less of the beneficiary) or other means
is all included as a taxable part of a de
ceased person’s estate. With the excep
tion of those gifts made “in contempla
tion of death,” property transferred by
gift before death is not considered part
of the deceased’s estate, thus escapes
estate taxation.
The federal gift tax was designed to
prevent a person from avoiding tax
liability completely in an inter-genera
tional transfer of property. Federal gift
tax rates are lower than federal estate
tax rates. In addition, amounts trans
ferred by gift may reduce the size of
the estate, and this reduction occurs on
the “top end” of the estate since the es
tate tax is graduated. These same
amounts as gifts are taxed nearer the
“bottom end” of the gift tax scale.
Gifts can be made to any number of
people, and the gift tax is computed
only on that amount in excess of
$3,000 annually for each d on ee. In ad
dition, each person has a lifetime gift
exemption of $30,000. It may be used
all in one year, or it may be spread
over a number of years. It may be used
for gifts to one individual or to any
number of people. As in the case of the
annual $3,000 exclusion, if a husband
and wife join in making the gifts, the
combined lifetime exemption is dou
bled.
Gifts greater than the exemption are
subject to taxation at federal gift tax
rates shown on page 26. However,
with a modest amount of planning, a
gift program spread over several years
can reduce the size of the estate to the
point that federal estate taxes are of no
consequence while the annual gift
package is small enough that no gift
tax is due.
L ifetim e G ift Program. Use of gifts
in estate planning can be a useful tech
nique. Not only can it result in overall
tax savings, but gifts can be used as a
TRANSFER PLAN IN A FAMILY CORPORATION
Year
Value of
Parents’
Interest
%
Parents
Own
Value of
Son A’s
Interest
%
Son A
Owns
Value of
Son B’s
Interest
%
Son B
Owns
1976
1977
1978
1979
1980
1981
1982
1983
3 0 0 ,0 0 0
2 2 8 ,0 0 0
2 1 6 ,0 0 0
2 0 4 ,0 0 0
1 9 2 ,0 0 0
1 8 0 ,0 0 0
1 6 8 ,0 0 0
1 5 6 ,0 0 0
100
76
72
68
64
60
56
52
0
3 6 ,0 0 0
4 2 ,0 0 0
4 8 ,0 0 0
5 4 ,0 0 0
6 0 ,0 0 0
6 6 ,0 0 0
7 2 ,0 0 0
0
12
14
16
18
20
22
24
0
3 6 ,0 0 0
4 2 ,0 0 0
4 8 ,0 0 0
5 4 ,0 0 0
6 0 ,0 0 0
6 6 ,0 0 0
7 2 ,0 0 0
0
12
14
16
18
20
22
24
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
of excess
over:
estate
tax is:
but not
over:
25
FEDERAL GIFT TAX RATES
(A)
(B)
(C)
Amount of taxable
gifts equal to or
more than—
Amount of taxable
gifts less than—
Tax on amount in
column (A)
(D)
Rate of tax on
excess over
amount in
column (A)
Percent
$
$
5 ,0 0 0
5 ,0 0 0
1 0 ,00 0
1 0 ,0 0 0
vu
$
1 1 2 .5 0
5 'A
2 0 ,0 0 0
3 7 5 .0 0
874
2 0 ,0 0 0
3 0 ,0 0 0
1 ,2 0 0 .0 0
1072
3 0 ,0 0 0
4 0 ,0 0 0
2 ,2 5 0 .0 0
1372
4 0 ,0 0 0
5 0 ,0 0 0
3 ,6 0 0 .0 0
1672
5 0 ,0 0 0
6 0 ,0 0 0
5 ,2 5 0 .0 0
183/4
6 0 ,0 0 0
1 0 0 ,0 0 0
7 ,1 2 5 .0 0
21
1 0 0 ,0 0 0
2 5 0 ,0 0 0
1 5 ,5 2 5 .0 0
2272
2 5 0 ,0 0 0
5 0 0 ,0 0 0
4 9 ,2 7 5 .0 0
24
5 0 0 ,0 0 0
7 5 0 ,0 0 0
1 0 9 ,2 7 5 .0 0
2674
7 5 0 ,0 0 0
1 ,0 0 0 ,0 0 0
1 7 4 ,9 0 0 .0 0
2 7 3A
1 ,0 0 0 ,0 0 0
1 ,2 5 0 ,0 0 0
2 4 4 ,2 7 5 .0 0
2974
1 ,2 5 0 ,0 0 0
1 ,5 0 0 ,0 0 0
3 1 7 ,4 0 0 .0 0
3172
1 ,5 0 0 ,0 0 0
2 ,0 0 0 ,0 0 0
3 9 6 ,1 5 0 .0 0
333/4
2 ,0 0 0 ,0 0 0
2 ,5 0 0 ,0 0 0
5 6 4 ,9 0 0 .0 0
3 6 3/4
2 ,5 0 0 ,0 0 0
3 ,0 0 0 ,0 0 0
7 4 8 ,6 5 0 ,0 0
3 9 3 /4
3 ,0 0 0 ,0 0 0
3 ,5 0 0 ,0 0 0
9 4 7 ,4 0 0 .0 0
42
3 ,5 0 0 ,0 0 0
4 ,0 0 0 ,0 0 0
1 ,1 5 7 ,4 0 0 ,0 0
4474
4 ,0 0 0 ,0 0 0
5 ,0 0 0 ,0 0 0
1 ,3 7 8 ,6 5 0 .0 0
4774
5 ,0 0 0 ,0 0 0
6 ,0 0 0 ,0 0 0
1 ,8 5 1 ,1 5 0 ,0 0
5074
6 ,0 0 0 ,0 0 0
7 ,0 0 0 ,0 0 0
2 ,3 5 3 ,6 5 0 .0 0
5272
7 ,0 0 0 ,0 0 0
8 ,0 0 0 ,0 0 0
2 ,8 7 8 ,6 5 0 .0 0
54 3/4
8 ,0 0 0 ,0 0 0
1 0 ,0 0 0 ,0 0 0
3 ,4 2 6 ,1 5 0 .0 0
57
4 ,5 6 6 ,1 5 0 .0 0
573/4
1 0 ,0 0 0 ,0 0 0
—-
means of providing incentive to the
younger family members who have an
interest in the business.
Because the farm business often is
difficult to divide in such a way so that
gifts can easily be made, many families
have turned to the use of the corpora
tion as a means of simplifying gift pro
cedures. The corporation will allow the
entire business to be kept together as
a single operating unit. Fractional in
terests may be transferred by gifts of
shares of stock. This simple procedure
allows the business to continue without
interruption.
One of the unique features of the
corporation is that the person who
owns over 50% of the shares still retains
control of the operation. Thus, a parent
can retain control of a family farm
corporation even after a substantial
portion of the business has been trans
ferred to others within the family. For
example, assume a farm family has as
sets of $300,000 which they include in
a corporation organized with 300
shares of stock valued at $1,000 per
share. If the parents follow a pattern
26
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Federal Reserve Bank of St. Louis
of gifts to two sons utilizing their
$3,000 annual exclusion per donee and
$30,000 lifetime exemption (which can
be doubled since both parents can join
in making the gifts), after seven years
they can reduce the size of their estate
to $156,000 and still own 52% of the
business and, therefore, be in complete
control of the operation. The table on
page 25 illustrates how this might be
accomplished.
Planned use of gifts combined with
operation under a corporate structure
not only allows the parents to reduce
the size of their estate, but also gives
added inducement to younger family
members to become involved in the
business. They may acquire an owner
ship interest in the business through
gifts, and they also may be given the
opportunity to purchase additional
shares. Sale of shares of stock can be
a means of providing retirement in
come for the retiring parents.
The corporate structure may be de
signed to permit heirs most interested
in the farm business eventually to ac
quire the entire business by the pur
chase of shares from family members
not interested in the business. Without
such provisions, ownership of the busi
ness may become so dispersed among
heirs not interested in farming that an
unmanageable situation results.
To facilitate this objective, corporate
bylaws should provide that sharehold
ers who wish to sell their shares must
offer them first to the corporation itself
or to the other family members who
are already shareholders. While this
provision does not alleviate the prob
lem of dispersal of ownership among
a number of heirs if they do not wish
to sell, it reduces the possibility of
their selling to parties outside the family;<
“Buy-sell’ or “option” agreements
often are used to encourage purchase
of shares of minority shareholders by
those involved in the actual operation
of the business. These agreements may
include installment payment provisions
with or without interest. Another pos
sibility is to allow the off-the-farm, mi
nority shareholders to exchange their
stock for notes, debentures or other
types of debt securities issued by the
corporation. This will assure them of
some continuing income, but will allow
the on-the-farm shareholders to operate
the business without interruption and
with complete management control.
Corporate Taxation. Closely held
family corporations have two options
available under the federal tax code.
They may be taxed as regular corpora
tions under provisions of Sub-Chapter
C of the Internal Revenue Code or
they may elect tax-option status under
the provisions of Sub-Chapter S of the
code.
Sub-C hapter S Corporations. This
section provides that a small corpora
tion, one having 10 or fewer sharehold
ers, is qualified to be taxed in a man
ner similar to that of a partnership
rather than as a regular corporation.
For some corporations this tax option
will result in income tax advantages.
Under this section, the business re
mains structured as a corporation for
all purposes except taxation. For the
purpose of taxation, each shareholder’s
portion of long-term capital gains, op
erating losses and undistributed taxable
income is passed through in a manner
similar to that of partners operating
under a partnership agreement. In this
way, individual shareholders pay tax
on any income generated by the cor
poration as part of their individual in
come.
To qualify for Sub-Chapter S treat
ment, a corporation must be a small
business corporation with 10 or fewer
shareholders, and all shareholders must
(Continued on p age 70)
MID-CONTINENT BANKER for August, 1976
Ag/Leasing Can Play Im portant Role
In F inancing Farm Equipment
HE
AGRICULTURAL
industry
touches our lives more often, and
with greater impact, than any other sec
tor of the economy. Only energy and
its related elements dare to compare
to agriculture’s upward spiral of in
fluence on our daily lives.
In order to meet the demands of the
future, industry must continue to re
place existing plants as well as expand
its physical assets. The agricultural in
dustry is no exception. Plant and phy
sical assets mean machinery and equip
ment.
To illustrate: Non-real estate assets
have risen an estimated 17% since Jan
uary 1, 1975. This translates to approx
imately $20 billion. There are no indi
cations that we will realize a reversal
in these trends in the foreseeable fu
ture.
Keep in mind that these figures re
late only to farm assets and do not in
clude dollars being invested in agrirelated activities, such as fertilizer pro
duction, storage facilities, transporta
tion and various other farm co-op op
erations.
As bankers, we should be keenly
aware of, and interested in, this growth
of non-real estate assets. Even more,
an awareness as lessors or potential
lessors is imperative, because this
growth represents the sole source for
future portfolios in agri-related equip
ment.
In light of these introductory re
marks, let’s examine leasing and its op
portunities as it pertains to agribusi
ness.
How is leasing used and how can
it be applied to the agricultural in
dustry?
Lirst, a word of warning on the
nomenclature of leasing. Lease termi
nology is generally confusing and sub
ject to frequent misuse. It is rare that
two different authors or leasing experts
use a given term in precisely the same
way. In addition, participants of a leas
ing arrangement place different prior
ities on its many facets.
Lor example:
• The lessor—his interest is in the
T
By DONALD L. DETERS
Vice President
First N a tio n a l Bank
St. Louis
yield and its components.
• The lessee—his interest is centered
in rental expense and his rights and
obligations under the lease.
• The tax practitioner—his interest
is concerned only with who is entitled
to depreciation and investment tax
credit (IT C ).
• The accountant—his interest is in
the capitalization of equipment and
any related debt.
Keep in mind that some of these
terms are intended to describe leases
functionally, others are intended to de
scribe leases in terms of the conse
quences they give rise to and still
others are intended to describe leases
in terms of what they achieve for the
lessor or the lessee. There is obviously
much overlap among the various terms.
Allow me to confine this discussion
A uthor Receives Promotion
Mr. Deters was recently elevated
from assistant vice president to vice
president at First National in St.
Louis. Mr. Deters joined the bank
as a trainee in 1968, joined the
credit department in 1969, was
named a business development rep
in 1970, commercial banking officer
in late 1970, head of the leasing de
partment in 1973 and assistant vice
president in 1974.
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
to true leasing, and exclude those trans
actions containing provisions that tend
to make the arrangement a hybrid fi
nancing vehicle. I will touch on these
and their various ramifications later.
I will be discussing direct equipment
lease financing, and I emphasize the
word “direct,’’ to make the most con
cise differentiation between leasing and
the practice of banks which—in a thirdparty role— lend, discount or advance
lines of credit to finance lease con
tracts. Basic to and inherent in the
mode of direct lease financing is the
fact that the bank is the owner and
lessor of the equipment.
I would like to touch on three spe
cific leasing-oriented points:
• The concept of leasing—what is a
lease and what are the elements of
leasing?
• Lease pricing and profitability—
the cost of leasing to our customers
and the elements of pricing and profit
ability to us as lessors.
• Involvement in leasing—should we
be involved, and why?
Conceptually, leasing is a financial
transaction involving an owner who is
the lessor, and a user who is the lessee.
The always-present item that brings
the two together is the need for use of
equipment by the user/lessee and the
willingness of the owner/lessor to rent
that equipment.
The equipment involved in a lease—
preferably new and revenue-producing
equipment—serves as the functional
equivalent to collateral for the duration
of the lease contract, an intermediate
term of from three to 10 years. Gen
erally speaking, the implicit rate in the
transaction is fixed over the term of the
lease. And, of course, depending upon
the terms of the contract, the user/
lessee has the right to acquire some
future use of the equipment at the end
of the basic lease term by exercising
purchase or renewal options.
Those, then, are the basic elements
contained in a lease arrangement. And
while I have changed a few words and
substituted some leasing buzz-words
here and there, the thing to realize is
27
that I have really just described a secured-term loan. This, in itself, should
serve to show that the concept of leas
ing is not some off-base mode of fi
nancing, but rather, a logical extension
of proved lending methods, given the
applicable situation. A lease arrange
ment, like all other lending arrange
ments, requires a credit decision where
in all information and risks must be
recognized and properly evaluated.
Aside from some legal technicalities,
the real difference between conven
tional loans and leasing lies in the cost/
pricing and profitability of a lease. L et’s
look at these in more detail.
The true cost of leasing to our cus
tomers can be shown in this simple
equation:
Im plicit interest cost + loss o f a ccel
erated depreciation + loss o f IT C + pur
chase option cost or loss o f equipm en t
use = cost o f leasing.
Conversely, the pricing of a lease
and the elements of its profitability to
the lessor can be shown through simple
addition also.
Im plicit interest rate + use o f tax
shelter (depreciation) + use o f IT C +
receipt o f residual value = rate o f re
turn.
Because there are multiple com
ponents contributing to or detracting
from lease yields, it is vital that we get
a breakdown of their relative weights
before accepting a lease arrangement.
For example, Revenue Procedure 7521, dated May, 1975, is intended to
“. . . set forth guidelines that the In
ternal Revenue Service will use for ad
vance ruling purposes in determining
whether certain transactions purporting
to leases of property are, in fact, leases
for federal income tax purposes.”
The hard and fast rules we must
follow in this revenue procedure in
order to enjoy the tax shelter and ITC
frequently forces small equipment les
sors to look solely to rate and residuals
to obtain desired yields.
It may be, therefore, that a signifi
cant portion of the yield is illusory, but
these illusions can clearly be seen if
we approach a lease situation as we ap
proach any lending situation—carefully
and completely.
At any rate, leasing yields should
exceed loan yields primarily because
there are greater risks involved. But
again, this is nothing new to lending.
Here are some of the risks involved
that are unique to leasing:
• Intermediate terms.
• Fixed-rate feature.
• 100% financing.
• Possible loss of tax benefits.
• Limitations to recovery if lessee
becomes bankrupt.
• No default covenants other than
delinquency.
28
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Federal Reserve Bank of St. Louis
With all this in mind, should bankers
be involved in leasing?
Without question, I would say defi
nitely yes. At least, we should be at
tuned to leasing’s benefits to banks and
to the consumer and be able to offer it
as another financial service as the situa
tion warrants. I say definitely yes be
cause a lease is:
• A financial transaction in which
risks can be identified and evaluated.
And, therefore, a lease can become an
acceptable earning asset.
• Profitable—with yields that should
be higher (and more profitable) than
conventional loan yields.
• A lending alternative that allows
greater flexibility by offering potential
preferential tax treatment, a solution
to balance limitations and other prob
lem areas, such as conservation of
working capital.
• A tool for management of taxable
income.
Further, I say yes, be involved, be
cause there also are market considera
tions :
• Customer demand for leasing ser
vices continues to grow rapidly. There
is a growing interest and need for lease
financing, and, as a result, lease port
folios are growing. This raises the sec
ond market consideration.
• The defensive measure considera
tion: Are lease portfolios being held in
your markets or are those earnings go
ing outside to a large regional or na
tional competitor? As farming expands
further in your market area, the large
leasing firms will move quickly to com
pete for a share of the credit demands
in those markets. In many instances,
they’ve already made their moves and
are currently financing our customers
Ag Bankers to M eet
NEW ORLEANS— The 25th an
nual ABA National Agricultural
Bankers Conference will be held
here November 14-17. The confer
ence is expected to attract more
than 1,909 bankers. It will be spon
sored by the ABA Agricultural
Bankers Division.
Theme of the conference will be
“Agriculture and Banking— Serving
America.” Keynote speaker will be
W. Liddon McPeters, president,
Security Bank, Corinth, Miss., who
will become ABA President follow
ing his election in October.
Conference chairman is T. Excell
Hankins, vice president, Bank of
Dixie, Lake Providence, La.
Bankers desiring to receive the
registration mailing in September
should write to the ABA Agricul
tural Bankers Division, 1120 Con
necticut Ave., N. W., Washington,
DC 20036.
while realizing premium yields. We in
St. Louis have, and are, experiencing
this competition first hand. In retro
spect, it would have been better for us
to act rather than react. What does it
take to get involved?
Like any new service, any new idea,
any new plan, leasing requires com
mitments— a commitment to operate
within the general concept, a commit
ment of man-hours and a commitment
of allocated earning assets.
How then, does all this relate to your
activities in the ag market? Obviously,
leasing bears specifically on that side
of the market involving the financing
of new machinery and equipment, and
for most of us, leases are limited to
such assets.
Certainly, we do not intend to elim
inate the conventional term loan, the
chattel mortgage or the conditional sale
contract in that these lending vehicles
have their place and will continue to
serve a purpose in providing install
ment/'term financing.
Rather, it is our intent to identify
the true lease as an alternative form
of financing. Because of the pricing
elements of ITC and depreciation, it
becomes a highly specialized financing
form. Not specialized to the extent that
very few can do it, but—more to the
point— that certain circumstances and
conditions must be met.
Generally speaking, these conditions
prevail when both potential lessor and
potential lessee are tuned in to manag
ing their tax positions and the various
provisions of the code affecting them.
Consider, for example, the successful
farm operation that has been following
a program of updating equipment on
a timely basis, employing accelerated
depreciation and utilizing available
ITC. In addition, the farm manager is
employing the practice of timely bulk
purchases of feed and fertilizers.
It must be assumed that, following
these and other allowable practices, the
farm has accumulated tax-loss carry
forwards.
Being in this tax-loss carry-forward
position, any additional deductions,
such as accelerated depreciation and
ITC, have a greatly diminished value,
because they will either have to be de
ferred until future periods or be lost
entirely.
However, let’s consider the leasing
alternative at this point, and make the
following assumptions:
• A new piece of machinery is
needed and placed on order for June
1 delivery.
• The new equipment has a cost of
$50,000.
• There is a 10% ITC available, and
the potential lessor can use this credit
against his own taxes over the remain-
MID-CONTINENT BANKER fo r August, 1976
Call John
And talk to the man whose job it is to
know everything about our bank.
As President of Fourth
National Bank, John D. Izard
supervises, on a day to day
basis, the basic lending
operations of the bank. He
is particularly know ledge
able in correspondent
banking, having ser/ed with
major O klahom a banks
over 25 years.
Think of a way w e might be
a ble to offer you more.
Then call John, he’ll know
what we can do.
5 * ',
I
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
.
%
29
ing quarters in the tax year.
• The equipment is eligible for ac
celerated depreciation over eight years
as provided for in the asset depreciation
range guidelines.
• The farm has been borrowing at
a 10% rate on its equipment contracts.
With these simple assumptions, we
will construct an eight-year lease, call
ing for a commencement date of June 1
and 16 semiannual rents due on De
cember 1 and June 1. Further, we’ll as
sume that the lessor is seeking a yield
that is equal to the bank’s equipment
lending rate.
Using a standard lease-analysis ap
proach, the semiannual rental equals
$3,607, and the total of the rentals is
$57,712. If analyzed closely, it is ap
parent that the interest rate implied in
this contract is 3.5%.
Therefore, through the process of
blending a true lease into his financing
structure, the farm manager has placed
this new equipment in service, with no
cash outlay until 12 months after order
date, and has traded tax benefits for a
reduction of 6.5% in his equipment fi
nancing rate.
There are two key lessons inherent
in this example:
• To show the ideal circumstances
that provide the ideal climate for a
lease instrument.
• To illustrate the value of tax bene
fits in interest-rate terms.
Typically, as I stated earlier, the
lessor would be looking for a higher
yield than the loan rate, so it’s unlikely
that a lessor would give dollar-for-dollar treatment of the tax benefits on the
lease rate.
In a related area, farm co-ops have
been employing the lease instrument
a
in their overall financial structure. Our
current tax laws provide that the co-op
is taxable only on that portion of earn
ings not paid out in the form of patron
age refunds. This means that any farm
co-op, investing heavily in capital as
sets, generally has a limited amount of
taxable income against which to charge
the deductions and credits.
The result has been that many of
the co-ops, principally those involved
in fertilizer production and distribution,
as well as transportation, have turned
to the lease and away from the more
traditional forms of financing.
Lastly, the lease instrument carries
with it the potential of increasing
yields far beyond conventional loans.
This is made possible through the in
clusion of tax benefits and residual po
tential in a transaction that also implies
a standard interest rate charge. When
a banker is faced with an investment
decision concerning the allocation of a
bank’s available investable funds, he
finds that the lease, and its potential
higher comparative yields, is an in
ducement to put the money back on
the farm. Too often, the equipment
loan and its interest rate restriction are
passed over in favor of other invest
ments having a better risk/ reward ratio.
But, herein also lies a danger that I
alluded to earlier, with regard to nontrue leases. Great care must be exer
cised in using the lease instrument to
realize yields in excess of regulated in
terest-rate ceilings. Utilizing the true
lease approach is well within our rights.
However, as we move further away
from the guidelines of a true lease (for
example, nominal purchase options),
the lease becomes suspect and trouble
could be forthcoming. Following the
r *
Credit Guarantee Insurance on all forms
of lending.
.
• MOBILE HOMES
• BOATS
• LAND CONTRACTS
• MODULAR HOUSING
• LEASES
• VACATION HOMES
For additional information, write or call:
Payment Plans Diversified Credit Service Inc.
4524 Bailey Ave. • Buffalo, New York 14226
Telephone: 1 -7 1 6 -8 3 4 -7 6 0 0
30
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Federal Reserve Bank of St. Louis
^
provision supplied in Revenue Proce
dure 75-21 is more than adequate safe
guard against these dangers.
More and more, leasing as a mode of
equipment financing will be seeping to
the primary producer level. When it
gets there in full force, the banking
community should be in the position to
best service this market. • •
Agriculture
(Continued from page 23)
ty of the customer, the extent of the ac
commodation needed, documentation
requirements and, perhaps, general
credit policies relative to the type of
credit in question.
It might be possible to make a deci
sion on the acceptability of the credit
prior to termination of the initial dis
cussion, Mr. Beasley says.
Generally speaking, the assistance
given is through the avenue of loan
participation. Usually, he says, the
downstream bank completes a partici
pation certificate and submits it in con
junction with copies of financial infor
mation, resolutions, notes and other
collateral instruments that are perti
nent.
Proceeds of note participations are
credited to the correspondent’s ac
count. Servicing of the credit is the re
sponsibility of the originating bank.
Correspondents are expected to carry
their legal lending limits and allow
First of Amarillo’s participations to be
on a last-in, first-out basis.
Generally, the participation is priced
at /2% below that charged to the corre
spondent’s customer or a fixed percent
age minimum, whichever is greater.
The minimum rate is necessary in order
to preclude handling participations at
an unrealistic rate, Mr. Beasley says.
He expects the originating bank to
maintain compensating balances equal
to 20% of the total participations out
standing.
• Citizens & Southern National, At
lanta, recently leased an irrigation unit
to the customer of a downstream corre
spondent.
The conventional way of handling
such a situation would have been to fi
nance the equipment over a period of
three to seven years. However, because
of certain tax advantages for the cus
tomer, the bank was requested to lease
the irrigation unit.
According to Fred W. Greer Jr., vice
president and director of agribusiness
for C&S, the system was purchased by
C&S aud it is being leased to the cor-
MID-CONTINENT BANKER for August, 1976
“W ith the First as a partner,
we’ve succeeded as we’ve
helped Jim Boone's farm
implement business succeed.”
The First National Bank
o f Quinter, Kansas is a true
success story. A correspondent
bank relationship has helped it
develop and grow with an
important new customer.
In 1965, Robert Bugbee,
president o£ the bank, called
upon th£ First National Bank
o f Kansas Qity to participate in a
major line of'credit for Mr. Jim
Boone, founder o f Ideal
-Industries in Quinter,
manufacturer and distributor
o f specialized farm equipment.
The First National Bank
o f Kansas City extended credit
* used for seasonal working
capital and in recent years for
„ major business, expansion and
^ distribution o f Jim Boone’s own
invention,, the Flex-King stubble
" mulch plow.
i
Credit assistance and the
onal help o f business
rtise o f the people in our
spondent Department like
Dudley have been
t in the success o f First
Bank o f Quinter. *
And; as Jim B oone’ s small
husband-and-wife, company has
expanded to a thriving
corporation, First National
Back o f Quinter has grown with
important new business.
F ~ C&ll thp professional staff o f
the Correspondent Department
o f the First National Bank of
Kansas City. We can help your
vith the development of
iciness.
„
, KiOur correspondent tradition
has been built on helping banks
like'theTfirst National of
er.
•
Why not put our strong '
tradition o f excellence to work
r success.
”Yxir success is our tradition.
First
.
National
D o | ~ | I f o f KANSAS CITY
D d l I I V MISSOURI
An Affiliate of First National
Charter Corporation
MID-CONTINEINT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Member FD1C
31
respondent’s customer with intention to
sell it at the end of the five-year lease.
• Continental Illinois National, Chi
cago, reports that, in every way except
numbers of farms and workers, agricul
ture is the most important growth in
dustry. According to J. Michael Baird,
commercial banking associate, the use
of purchased inputs (such as machin
ery, fertilizer, herbicide and hybrid
seed) has caused the demand for credit
to increase dramatically, exceeding the
capacity of many rural banks.
Mr. Baird reported that a greater
emphasis than usual is being placed on
developing more agricultural credit this
year on the part of downstream corre
spondents as a result of the increase in
demand for all kinds of ag and agri
business loans on an overline basis.
In the bank’s annual management
seminars, the importance placed on
Continental Bank’s ability to work with
correspondents by participating in
larger agricultural credits has been
stressed. According to Mr. Baird, the
bulk of this paper represents loans to
livestock and grain producers and to
grain elevators.
A considerable amount of time and
money has been spent by Continental
Bank’s personnel in assisting correspon
dents in providing their ag customers
with sound financial management tech
niques, Mr. Baird said. Encompassed
within this program is the preparation
of the financial information necessary
to process an ag credit, which includes
cash flow information, a history of the
borrower, the collateral to support the
loan and written understanding as to
the source and provisions for repay
ment.
Continental Bank’s management feels
it is important that, once a bank makes
a commitment to be active in the ag
lending field, it continues to stay in the
business. Correspondents are some
times frustrated in dealing with a city
correspondent one year only to find
that the city bank is not equally coop
erative in extending credit the next
year.
• United Bank, Denver, maintains
an ag department ranking among the
20 largest in the nation, according to
Robert H. Dressel, vice president in the
correspondent department. The bank
also has a wholly owned leasing sub
sidiary with an ag specialist on its staff.
“A significant percent of our corre
spondent portfolio is in the form of agrelated overlines and liquidity partici
pations.’ Mr. Dressel stated. “In work
ing with agribusiness correspondents,
we counsel in credit structure and fi
nancial planning and, on a more per
sonal level, we can offer a full range
32
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Federal Reserve Bank of St. Louis
of trust and estate planning services to
individuals.”
With ag specialists located in several
different areas of the bank, teamwork
is essential, according to Dennis Dex
ter, leasing officer. He explained how
many areas can work together with a
single customer.
Inspecting leased center-pivot sprin
kler systems in a neighboring state,
Mr. Dexter also called on irrigation
equipment dealers who frequently
were a source of interface to larger
local farmers with operating capital
needs.
“In one case, it was the dealer him
self who faced a serious financial
need,” Mr. Dexter said. “His goal was
to move from an equal partnership to
complete ownership and the credit
necessary was beyond the capability
of his local bank. Through our corre
spondent relationship, the financing
was made possible and a good friend
now also is a good customer.”
« Commerce Bank, Kansas City,
participates with correspondents in
large ag lines utilizing a maximum
amount note, according to Fred N.
Coulson Jr., senior vice president. As
sistance is offered with the preparation
of the necessary financial statements,
including the cash flow, to permit the
establishment of a line of credit for a
specified time, and a note for the maxi
mum amount of the loan is executed.
A certificate of participation for the
maximum amount of the overline is
forwarded to Commerce Bank, accom
panied by copies of all supporting doc
uments. Advances and repayments are
handled with a minimum of paper
work, since instructions to charge or
credit a correspondent’s account are
usually received by phone.
The customer is not required to
come to the bank to sign a new note
each time he requires funds, Mr. Coul
son said. Livestock, equipment and
other large purchases can be made
with a bill-of-sale draft, which provides
proof of purchase.
Through the proper use of these par
ticipations, Commerce Bank has been
able to provide its correspondents the
flexibility of allowing their customers
to enlarge ag operations and sometimes
bring their children into a family part
nership or corporation and retain the
family farm, Mr. Coulson said.
• United Missouri Bank, Kansas
City, has accepted ag overlines from
downstream correspondents on numer
ous occasions, according to Joseph D.
Henderson, vice president.
He said the bank recently accepted
$110,000 of a $175,000 loan to a
young Missouri cattleman-fanner whose
needs were more than his local bank’s
limits.
“We worked with the borrower and
the local bank in analyzing past his
tory, present and future needs and re
payment capacity,” he said. “The loan
was summarized on the local bank’s
documentation and photo copies of fi
nancial data and loan documents were
forwarded to us with a simple certifi
cate of participations.
"By this simple process, the local
bank acquired a new depositing and
borrowing customer and an excellent
probability of receiving additional busi
ness from ethers of this respected local
family.
“It seems obvious to us that overlin
ing, plus the use of portfolio adjust
ments when a country bank is heavily
loaned, are simple low-cost methods
of moving additional funds to rural
areas,” Mr. Henderson said.
• American National, St. Joseph,
Mo., participates with correspondents
in holding meetings for farmers about
estate tax planning. Vernon E. Whisler,
senior vice president, and James Bocell,
senior trust officer, explain to farmers
how farms are managed once they have
been placed in trust.
According to Mr. Whisler, these
meetings are usually held in the winter
months and they attract a large number
of farmers. Attendance has been known
to top 1,000, although the average at
tendance is about 200.
Farmers are told that American Na
tional is interested primarily in carry
ing out the wishes of the benefactor
when a farm is placed in trust. This
policy, Mr. Whisler said, is quite dif
ferent from that of commercial farm
management firms. The complexities of
placing a farm in trust are explained
and the point is made that each trust
is individually tailored to the needs of
the benefactor and his heirs.
Mr. Whisler said that many farmers
appreciate the trust option because it
gives them an opportunity to leave ex
plicit instructions for the operation of
the farm after the benefactor is no
longer present.
• Bank of Oklahoma, Tulsa, is ac
tive in providing ag assistance to
downstream correspondents.
Charles A. McNamara, assistant vice
president, reported a case involving a
commercial wholesale nursery in east
ern Oklahoma. The nursery requested
quite a large line of credit and, after
investigating the situation, Mr. McNa
mara introduced its management to a
long-term ag lender who arranged a
loan on the nursery’s real estate with
terms matched to the nursery’s cash
MID-CONTINENT BANKER for August, 1976
Central National Bank is now offering seven automated financial systems designed to help you
fine tune your management controls, evaluate the performance and profitability of your
departments, and spot problems, opportunities and trends early enough to do something
about them.
, x
. ,
,
These systems give you crisply-reported data on your operations that you can interpret
easily and apply guickly. They represent the most advanced state of the data processing art, are
fully integrated and will interface with the next-step programs we are currently developing.
The seven new Central Automated Financial Systems are:
On-Line Savings
Certificates of Deposit
Demand Deposit
General Ledger
Installment Loan
Commercial Loan
Payroll Processing
We would welcome the opportunity to discuss these systems with
you and to answer any questions you or your operations officers may have
Call your Central Automated Financial Systems Representative at
(312) 443-7200.
CENTRAL AUTOMATED FINANCIAL SYSTEM S
A D IV IS IO N O F C E N T R A L N A T IO N A L B A N K
120 South LaSalle Street, Chicago, Illinois 60603
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
33
flow.
Bank of Oklahoma then participated
with the local bank in the nursery’s
seasonal needs, extending a line of
credit, the proceeds of which were
used to fund expenses associated with
the harvesting of plants, the packing
and shipping of the plants and the
funding of accounts receivable until
paid, Mr. McNamara said.
• First National, Tulsa, has devel
oped working relationships with 265
banks, most of which are located with
in a 300-mile radius of Tulsa, accord
ing to Ray Miltz, vice president for re
gional banking.
“It’s not our desire to go into an area
and develop a direct customer-bank re
lationship,” Mr. Miltz said, “but, if a
potential customer is brought to our at
tention, we will assist the local bank
in any way possible by assisting in the
structuring of the credit and/or taking
the overline. Occasionally, the local
bank prefers that we make the loan
and then sell the local bank the portion
that it wants. The area banks are in a
much better position to serve customers
in their areas. They know the people
and know how to work with them.”
Mr. Miltz sees big things in the fu
ture of Oklahoma and the surrounding
region. “With the firming of the cattle
market, the good wheat crop relative
to other areas, and the diversification
in Oklahoma, the state is better off
than 99% of the rest of the nation,” he
said.
Particularly in ag, the future will
bring increased demands on the corre
spondent banking system, he said. “In
this particular geographic area, the in
creased need for capitalization in ag
has put greater demands on banks like
First of Tulsa to serve their co-bank
customers. They need this assistance
in handling larger ag and commercial
credits.”
When a single tractor can cost the
farmer $40,000, it isn’t long before the
local bank can have limit problems, he
said. A relatively small ag need can be
considerable in dollar amount from the
small bank’s point of view. With
growth in the economy, the small farm
er is becoming less and less a factor in
agribusiness. There’s growth in cor
porate farming and corporate family
farming and the less successful have
fallen by the wayside.
Mr. Miltz said the ag environment
of the last few years hasn’t changed the
bank’s attitude on farm loans. “We still
look at a man’s track record, at how
he’s handled himself in these recent
economically depressed times.” But
bankers aren’t prone to do any forecast
ing on the health of ag-business in the
near future, he said, “We don’t have
a crystal ball.”
Opportunities for First of Tulsa’s co
bank customers range from involve
ment in the Port of Catoosa transporta
tion system to such auxiliary enter
prises as financing grain elevators, Mr.
Miltz said. He added that the expan
sion of irrigation in western Oklahoma
and south central and southwest Kan
sas will make the area even more im
portant to the world’s food supply.
• American National, Chicago, oper
ates a comprehensive program assisting
correspondents in concentrated agricul
tural areas, according to Benson R.
Culver, correspondent representative.
One way American National helps
correspondents is by structuring par
ticipation agreements under which
American National purchases up to 40%
of eligible loans in specially categorized
pools of secured ag loans. This greatly
decreases the administrative cost of
participating in specific or single loans
and increases a correspondent’s flexi
bility in making loan commitments to
its customers, Mr. Culver said. • •
■ JAM ES C. BERRY, president, Air
Terminal Parking Co., has been elected
a director of United Bank, Chattanoo
ga. He also is president, Hospital Park
ing Management Co.
Project Business:
Junior A chievem ent Group
Begins Program at Bank
Project Business is the title of a pro
gram that has been launched by a
Junior Achievement group at National
Bank, North Kansas City.
A total of 102 ninth-grade students
have taken part in Project Business.
The group had regular meetings with
local business consultants, one of whom
was H. Virgil Bower, vice president of
the bank. When the Junior Achievement
group met with a consultant, three
units were examined: dialogue, action
and career exploration.
Field trips were an integral part of
the program and a highlight was a tour
of the bank, guided by Mr. Bower. The
students were able to get a look at the
bank s vault, accounting, tellers section,
loan department and Bank-24, National
Bank’s 24-hour ATM.
H. V ir g il B o w e r (s e a te d a t d es k ), v .p ., N a t'l
B ank, N o rth K ansas C ity , e x p la in s b a n k in g
pro ce d u res to g ro u p o f studen ts fro m local
ju n io r high school. Students w e r e p a r t o f 10 2 m e m b e r Ju n io r A c h ie v e m e n t p ro g ra m calle d
Project Business. The n in th -g ra d e rs m et w ith
v a rio u s a r e a businessm en, le a rn e d a b o u t a
n u m b e r o f caree rs, w e r e g iv e n to u r o f b a n k
b y M r. B o w er.
■ THOMAS W. STOKES has been
promoted from assistant vice president
to vice president, installment loan de
partment, Michigan Avenue National,
Chicago, while Frank J. Bonfiglio and
Janice A. Barrett have been named as
sistant cashiers.
24 Hour Toil Free Telephone Service
Weekly C onfidential Market Report
Marketing Seminars conducted for Clients in Your Area
WRITE OR CALL
FGL. 1200 35th St.
West Des M oines. Iowa 50265
515 223-2200
34
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Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for August, 1976
Moving Up with
Mississippim “
Panorama of Jackson,
Mississippi, one of the nation’s
fastest growing cities, with the
State’s Capitol Building in the
foreground and Deposit
Guaranty Plaza in the
background.
Mississippi, one of the star performers of the “ Sun Belt" States, is posting new growth records
in almost every economic category.
Over the past fifteen years Mississippi has achieved increases in population, personal income
and manufacturing far in excess of the national average. In fact, by 1975 Mississippi had already
exceeded its 1980 population growth projection, as established by the Commerce Department s
Bureau of Economic Analysis.
Furthermore, Jackson, Mississippi, is listed by economic experts as one of eleven cities
expected to show outstanding growth over the next 25 years*
As Mississippi’s largest and strongest financial institution, Deposit Guaranty has kept pace with
its state s dynamic growth. At the end of the 2nd quarter of 1976 total assets stood at $940.7
million, total deposits at $766.4 million and total equity capital at $62 million.
When your plans require assistance in Mississippi call us. (601) 354-8211
*Source: Wall Street Journal. April 6. 1976
DEPOSIT GUARANTY NATIONAL BANK
Main Office:
Jackson Mississippi; Grow with us; Member F.D.I.C.;
Branch Banks: Greenville Bank, Greenville, LeFlore Bank,
Greenwood; Mechanics Bank, McComb; City Bank & Trust Co.,
Natchez; Farmers Exchange Bank, Centreville; Monticello Bank,
Monticello; Newhebron Bank, Newhebron, and offices in
Clinton and Pearl.
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
35
International Banking News
A roundup of recent events in the international banking arena
First of Chicago C learing Center
Begun fo r Eurodollar CD M arket
First National, Chicago, has estab
lished in London a clearing center for
worldwide participants in the London
Eurodollar CD market.
Purpose of the new service is to cen
tralize the settlement of trades and to
provide custody of CDs for primary
and secondary markets. This, a bank
spokesman said, eliminates the need
among participants to make individual
settlements or deliver and receive CDs.
The center also provides assurance
of payment on the settlement day, re
portedly eliminating uncertainty that
may arise among traders in different
time zones.
Participants may instruct the center
to transfer CDs between custody ac
counts, between cash accounts or re
ceive funds from and make payments
to a non-participant. U. S. participants
may relay instructions through First
Chicago International Banking Corp.,
a New York-based bank subsidiary.
According to the First of Chicago
spokesman, establishment of the clear
ing system and its special convenience
to traders should contribute to the
growth of the London CD market. He
foresaw a market rise from the present
figure of $30 billion annually to $50
billion by the end of the center’s first
year of operation.
Mysteries of Foreign Exchange
U nraveled in N ew ABA Book
The American Bankers Association
has announced the first definitive book
on foreign exchange trading, Foreign
Exchange Trading and Techniques.
According to its editor, Donald Madieh, executive vice president, Detroit
Bank, and chairman, ABA International
Banking Division, “The book unravels
the mysteries of foreign exchange trad
ing which, until recently, were known
only by a handful of experts.”
Foreign Exchange Trading and T ech
niques has been sponsored by Mr.
Madich’s bank and includes a list of
authors that reads like a “Who’s Who”
of foreign exchange. One of those au
thors is from the Mid-Continent area,
Talat M. Othman, vice president, Har-
36
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ris Trust, Chicago. His topic: “How
Foreign Exchange Markets Work.”
Also in the book are an appendix
explaining an actual trade and a glos
sary of terms applicable to foreign ex
change trading.
Slowdown in Earnings Grow th
Predicted by Salomon Report
A substantial slowdown in interna
tional earnings growth of the major
U. S. multinational banking companies
has been predicted by a Salomon
Brothers study. Salomon Brothers is
headquartered in New York City.
“United States Multinational Bank
ing: Current and Prospective Strat
egies,” written by Thomas H. Hanley
of Salomon Brothers bank stock depart
ment, notes that over the longer term,
U. S. multinational banks will have to
change their basic strategies abroad.
While the year’s results don’t represent
a trend toward markedly lower growth
In ternat'l Lending Discussed
A clear and concise discussion of
commercial
banks’
international
lending strategies can be found in
an article in the Columbia Journal
of World Business, winter, 1975,
issue. The author is Francis A. Lees,
director, Business Research Institute,
St. John’s University, New York
City. Mr. Lees recently completed
a study of foreign banking in the
U. S.
The article examines the needs
and objectives of commercial banks
in the field of foreign lending, the
ingredients of a lending strategy,
how to control risk, structuring and
diversification of these loans and
coordination of funding and asset
management.
Also included are tables on in
ternational loans and credits of U. S.
commercial banks, short-term claims
of U. S. banks on foreigners, medi
um-term Eurocurrency claims of
London banks and changes in the
index of liquidity in the London
Eurocurrency market, 1973-75.
For information on reprints, write:
Reprint
Department,
University
Microfilms, 300 North Zeeb Road,
Ann Arbor, MI 48106.
in international earnings, the report
says, the projected moderate increase
in 1976 reflects a narrowing in interest
margins due to more limited oppor
tunities for funding profits.
Among other predictions made in the
report are:
• A 6-12% increase in international
earnings this year, compared with a
35.6% increase last year.
• A secular rate of international as
set and earnings growth of about 1520% yearly after 1976, depending on
adoption of new market penetration,
productivity and pricing strategies.
• A diminution in previously rapid
borrowings from banks by U. S. mul
tinational corporations will be offset by
sizable future foreign development
projects.
• A 15% increase in Eurocurrency
lending and a substantial reduction in
profitability of local currency lending.
Local currency lending is expected to
grow only 5-7%, compared with in
creases of 35-40% in recent years.
The Salomon Brothers study also
covers profitability by geographic area,
foreign exchange trading, lending to
less developed countries and tanker fi
nancings.
Readjustments of Currencies
Pegged as Exchange Problem
Quieter times are ahead in the for
eign exchange market, according to
Talat M. Othman, vice president, in
ternational money management divi
sion, Harris Bank, Chicago.
Noting that the dollar has stabilized
against European currencies, Mr. Oth
man indicated that the big problem so
far this year has been the adjustments
of European currencies against them
selves.
He pegged the major shocks in the
market as the realignment of the Italian
lira and England’s pound sterling.
Given the slow growth patterns and
greater inflation problems of the two
countries, he said, depreciation of their
currencies has been long overdue.
“The adjustment process has swung
perhaps too far,” Mr. Othman said.
“Both the Italian and United Kingdom
currencies may have seen their nadir
with a potential firming of both occur-
MID-CONTINENT BANKER for August, 1976
Liberty Bank can help your customers
export almost anything...
anywhere!
Although Australia, South Africa and Western Europe are
coal-producing areas, they are now getting coal from Kentucky
fields _ at a price lower than they can mine it in their own back yards.
Getting these foreign buyers together with your coal-producing
customers is an excellent example of how our International Division
and their trade promotion specialists can help you.
There’s a wide world of profit awaiting your customers in the
import-export trade. Our International Division can help.
Phone 502/ 589-4400
Liberty National Bank
and Trust Company of Louisville
International Division
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
37
ring during the rest of 1976.”
The long-range outlook for Britain
is rather negative, he said, but added
that for the short term, the inflation
rate will continue to abate until year
end.
D&B Develops M ark e tin g Service
X S .l, a new marketing service for
U. S. exporters, has been announced by
Dun & Bradstreet International, New
York City.
The service is designed to help ex
porters find new agents or distributors
in foreign locations and will bring ex
porters together with agents and dis
tributors for product discussions. It al
so will solicit direct expressions of in
terest from overseas businessmen.
through X S .l, D&B reports, an ex
porter can learn marketing facts such
as executive contacts for potential
agents and similar lines of business and
products the distributor may carry. The
service also provides information con
cerning languages and cable and telex
addresses in countries designated by
the client as potential markets.
International
(Continued from page 23)
approached its bank for assistance.
The bank agreed to provide construc
tion financing for the winches, but it
had little international experience with
which to evaluate the Norwegian firm
and its bank or to handle the techni
calities involved in getting the goods
to Yugoslavia.
C&S International Bank, New Or
leans, was asked by the local corre
spondent to assist with the arrange
ments. According to Quay W. (Pete)
Parrott Jr., vice president and manager
of the office, C&S was able to provide
the international expertise necessary to
fully transact the sale of the winches
for both the Louisiana supplier and the
Norwegian firm.
C&S agreed to lend purchase funds
to the Norwegian firm on two-year re
payment terms without recourse to the
seller, thus allowing the seller immedi
ate payment upon delivery of the
winches. C&S accepted a foreign bank
guarantee from the Norwegian bank
and also handled all international doc
umentation involved. This included
control of the shipment to Yugoslavia
while payment and guarantee were
coming from Norway.
“The transactions were a one-time
arrangement,” Mr. Parrott stated, “and
were profitable for all parties in
volved.”
38
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
• First National of Atlanta's ap
proach to providing international bank
ing services to downstream correspon
dents has been to identify the specific
correspondent or specific area where
international services are required and
to work together with the local corre
spondent to supply the service. So said
Robert W. Chamberlin, group vice
president in the international banking
department.
A case in point has been the devel
opment of a series of seminars on in
ternational banking for correspondents
and their customers. The seminars are
conducted throughout the state with
correspondents acting as hosts for a se
lect number of their customers.
First of Atlanta provides a team of
experts to explain international docu
mentary practices, letters of credit,
Export-Import Bank financing, Foreign
Credit Insurance Association (FCIA)
financing and direct lending, Mr.
Chamberlin said. Not only does First
of Atlanta provide its own personnel,
it arranges for representatives of the
Exim Bank and other agencies to be
on hand.
A typical seminar on international
lending took place recently in Dalton,
Ga., the carpet industry capital of the
world, Mr. Chamberlin said. “Our cor
respondent bank hosted a group of 14
officials of 10 companies. Some of the
attendees followed up the seminar by
visiting with our international opera
tions staff in Atlanta to see what really
occurred in practice.”
The seminars encourage a comforta
ble and efficient working arrangement
between the correspondent and its cus
tomer. First National does not sell itself
at the seminars, but offers advice on
how to best take advantage of interna
tional business opportunities. First Na
tional provides expertise and partici
pates with correspondents only when
requested to do so.
The correspondent becomes more
confident in international dealings by
means of the seminars, which feature
Bank Opens London Office
First National in St. Louis has
opened a London representative of
fice.
Although First National has had
correspondent relationships with
major European banks for a number
of years, the new office provides it
with direct representation in the
European market for the first time.
Richard A. Murray, assistant vice
president in the bank’s international
department, has been named head
of the London Office.
“how to” lessons in practical interna
tional instruments provided by First
National as well as through the gradual
development of contacts.
First National also provides foreign
exchange and direct lending services
to its downstream correspondents and
their customers.
• Continental Illinois National, Chi
cago, provides services to enable its
downstream correspondents to open up
international markets to their custom
ers, according to J. Michael Baird,
commercial banking associate.
Using the services available at Con
tinental Bank, correspondents can offer
their customers virtually the same ser
vices, along with the expertise in han
dling international transactions, that
are available to direct customers of
Continental, Mr. Baird said.
For example, a good customer of a
correspondent had an opportunity to
make a sale to a Brazilian firm. How
ever, the bank’s customer, a medium
sized manufacturing firm, was consid
ering turning down the sale and the
opportunity to develop a new market
because of inadequate knowledge of
the Brazilian buyer.
The correspondent banker explained
various ways of protecting foreign ship
ments, but also agreed that knowing
one’s customer is the most important
factor. He then phoned Continental’s
international credit department. An in
quiry was dispatched to Continental’s
representative in Sao Paulo, who, in a
short time, was able to provide infor
mation on the Brazilian firm.
After the correspondent received a
favorable report on the Brazilian firm,
it advised the customer that he could
safely sell on a “documents-againstpayment” basis. Following shipment of
the goods, the customer delivered the
invoices and the steamship bill of
lading to the correspondent, which
passed them to Continental for collec
tion.
Continental subsequently forwarded
the documents to its Brazilian corre
spondent. The Brazilian firm made
payment to the bank before the ship
arrived and used the bill of lading to
obtain the goods.
Continental Bank is involved in sim
ilar situations in which the downstream
correspondent bank, through Continen
tal’s international department, is able
to help its customers develop overseas
markets through the use of various in
ternational credit instruments, Mr.
Baird said.
For instance, an engineering firm
that was a good customer of one of
Continental’s correspondents required
Australian dollars for staff expenses
while in Australia, with a further need
MID-CONTINENT BANKER for August, 1976
can mean a lot
to keep your
custom ers happy.
Durable outer mailing
carton —helps protect
checks from postal damage.
'In today/out tomorrow"
service on virtually all
orders —customers are no!
kept waiting for checks.
Attractive re-usable inner
carton —ideal for storing
cancelled checks, used
registers... or buttons,
rubber bands, stamps,
etc., etc., etc.
Perfect perforation —helps
checks tear out cleanly, evenly.
Reorder tape —assures
accuracy on reorders.
Quality print job —each
check personalized with
customer's name and address,
carefully proofread
and inspected.
Quality control —a rigid system of
continuous MICR evaluation to help
keep checks out of the reject pocket.
8 encoded deposit tickets per filler (no
less) —helps decrease the problem of
running out of deposit tickets before
the customer runs out of checks.
Reorder reminder —helps customer
determine if more checks
are needed on the next order.
Gold embossed name on the
cover —a personalized touch
customers appreciate.
First check pad and register already
inserted in the check cover —ready to use.
Unhappy customers can be very costly. That's why we do our
best to keep your customers happy. In both our product and sales
support programs. With a lot of little extras that may not
seem very important until the lack of one of them causes a
problem. And a problem can cost a lot more than money. For us,
as well as for you. That's why we do our best to keep your
customers happy. L ittle th in g s c a n m a k e a b ig d iffe r e n c e .
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Federal Reserve Bank of St. Louis
CHECK PRINTERS, INC.
SALES HEADQUARTERS P.0. BOX 3399 ST. PAUL, IVIN. 55165
STRATEGICALLY LOCATED PLANTS FROM COAST TO COAST
to reconvert the foreign money into
U. S. dollars after the contract was
paid. Through Continental’s correspon
dent, the firm arranged to purchase
from Continental the Australian dollars
required for various expenses at the
“spot” or current day’s rate. At the
same time, the firm agreed to sell the
payment in Australian dollars back to
Continental six months later, at a pre
determined rate under a forward or
“futures” contract.
Mason said. Republic’s international
department shares attractive transac
tions that develop with the correspon
dent that provided the lead, making
the relationship a two-way street.
Republic also provides trouble-shoot
ing services for customers of its corre
spondents who are traveling abroad.
Recently, Republic located a correspon
dent’s customer who was stranded in
Spain and arranged immediate trans
fer of emergency cash by phone.
• Harris Trust, Chicago, reports
that firms transacting business overseas
in different national currencies are in
creasingly facing the risks of exchange
rate fluctuations.
Harris Bank started in foreign ex
change services on a limited basis in
1962, said Brace Pattou, public rela
tions officer. It became more active
through customer and correspondent
demand by 1966, and volume has been
mushrooming ever since.
Providing service to correspondents
in this area is a major activity of Har
ris’ International Currency Manage
ment Division. Sometimes such services
as the following are furnished, Mr. Pat
tou said:
Recently, a Midwest correspondent
bank was contacted by one of its cor
porate customers seeking to make a
capital investment in an African state.
The bank turned to Harris for help in
obtaining 500 million CFA francs, a
relatively little-traded currency with
historic ties to France. After a series
of complex transactions by the Harris
division, delivery of the CFA francs
was made in a short period without ex
change risk to the correspondent.
• United Bank, Denver, recognizes
the importance of giving smaller busi
nesses the same quality service as the
largest international enterprise, accord
ing to Robert H. Dressel, vice presi
dent in correspondent banking.
“The uses of our services by corre
spondents are as varied as their custom
ers’ needs,” Jack M. Carter, vice presi
dent in international banking, said.
“Currency and travelers checks are
common personal needs. A common
service to a corporation might be the
issuance of an import letter of credit.
“A tea and spice company, the cus
tomer of a small suburban correspon
dent, recently needed this kind of help
in obtaining some of its more exotic in
gredients. Our bank’s readily accepted
letter was guaranteed by the corre
spondent in this case, but we also are
able to assume the risk directly where
appropriate,” Mr. Carter said.
• Republic National, Dallas, began
major expansion overseas seven years
ago with the goal of establishing a net
work which, ultimately, would also
benefit its correspondents in the U. S.,
said Barry Mason, executive vice presi
dent.
In 1972, the bank’s international de
partment established a special group
for export financing under Eximbank/
FD IC programs for bank corporate
customers. By 1975, this group started
actively promoting Republic’s interna
tional services to correspondents.
Republic provides all regular inter
national services, said Mr. Mason, and
it has been known to offer additional
services, such as providing assistance
to customers of correspondents in
preparation of sales contracts and
agreements, identifying new markets,
arranging introductions to banking con
tacts overseas and handling credit in
quiries.
A number of leads for export financ
ing come through correspondents, Mr.
40
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
» Deposit Guaranty National, Jackson, Miss., has an international depart
ment that periodically has negotiated
export letters of credit for customers
of correspondents on such items as tele
phones and equipment going to the
Philippines, cotton to Japan, electronic
equipment to the Dominican Republic,
lumber products to Holland, ironing
boards to Venezuela, electrical equip
ment to Indonesia, material handling
equipment to South Africa and Iran,
egg products to England and Japan
and frozen poultry to Iraq.
In the import area, the bank has is
sued letters of credit on furniture from
Yugoslavia, fireworks from Hong Kong,
fluid mechanics and tile from Italy,
wood products from Malaysia, machin
ery from Germany, clock parts from
Germany and Switzerland, flower bulbs
from Holland and small motors from
Spain.
• Commerce Bank, Kansas City,
seeks to promote increased import and
export opportunities for the customers
of its correspondents, said Fred N.
Coulson Jr., senior vice president. The
bank' has a network of more than 475
foreign correspondent bank relation
ships throughout the world.
The Foreign Credit Insurance Asso-
eiation (FCIA) has issued a short
term policy in the name of Commerce
Bank that enables the bank to provide
export insurance and short-term financ
ing for the export sales of correspon
dent customers.
Commerce Bank is said to have the
only full-time foreign exchange trading
operation in its area, which enables it
to assist correspondents in all phases
of foreign exchange, including foreign
drafts and foreign exchange trading,
Mr. Coulson said. The bank can direct
ly issue foreign drafts and handle other
foreign exchange requirements for cor
respondents.
Mr. Coulson said a particular con
cern for correspondents in the Kansas
City region is the collection of foreign
checks deposited with local banks.
Commerce Bank has developed an in
ternational cash letter form for use by
its correspondents. More than 150 Mid
west correspondents are using the ser
vice, he said, which features immediate
credit to the correspondent’s account
with Commerce for all foreign checks
sent to the Commerce Bank interna
tional department for collection. No
service charge is made for handling
these items.
International department business
development officers, in addition to
making regular trips overseas, also call
regularly on Midwest correspondents
to provide first-hand assistance and at
tention to their international banking
needs, Mr. Coulson said.
• Mercantile Bank, Kansas City,
has an international department that
helps south central Kansas banks de
velop international business, according
to Jack L. Sutherland, senior vice presi
dent.
The realization of exploring a global
marketing scheme is sometimes made
more difficult by the location of the
manufacturer, Mr. Sutherland said. If
the company is located in a smaller
community, adequate research and ad
visory services may not be available.
As one means of providing the neces
sary technical knowledge and assist
ance, Mercantile Bank devises tailormade packages of international services
for its correspondents and their needs.
A specific example involves a medi
um-size bank in a fast-growing city in
Kansas. Mercantile’s correspondent re
lationship with this bank was estab
lished specifically to assist the bank in
establishing a responsive international
banking service through a local bank.
The package of services included
joint business development calls on ex
isting customers of the bank and pros
pects. Some time was spent evaluating
firms in the area to narrow the prospect
list to the most likely candidates need-
MID-CONTINENT BANKER for August, 1976
ing international services. Mercantile
Bank agreed to hold seminars or work
sessions on a periodic basis in the com
munity to explain the advantages of ex
panded global markets and answer
specific questions.
An unexpected result of this service
downstream has been the referral of
direct lending overseas leads upstream
to Mercantile, Mr. Sutherland said.
When these specific cases are finalized,
both banks will participate in the fund
ing of the loan, he added.
Mercantile Bank of Kansas City is
an affiliate of Mercantile Bancorp., St.
Louis.
• Merchants National, Mobile, Ala.,
has provided assistance to firms seek
ing import opportunities, according to
Peter M. Kenyon, vice president.
In the late 1960s, Mr. Kenyon said,
a firm domiciled in the northern part
of Alabama was actively seeking addi
tional sources of firecrackers for import
into the U. S. Traditionally, it had been
importing from Hong Kong and Japan
and was utilizing an upstream corre
spondent of its local bank, located in
New York.
Because the cargoes were being dis
charged in Mobile and because of
stringent regulations governing the re
moval of explosives from dockside
within a maximum of 48 hours, the
importer was constantly having prob
lems obtaining bills of lading from
banking channels. In several instances,
the bills of lading had not been re
ceived by the local bank from the New
York correspondent prior to the arrival
of the merchandise, and, in order to
meet U. S. customs regulations, guar
antees had to be issued by Merchants
National as an accommodation to the
local bank.
Mr. Kenyon said he saw an oppor
tunity to be of direct assistance to this
importer and he approached the im
porter’s local bank to offer Merchant’s
services. Both the bank and the import
er were convinced that Merchants
could handle the documentation in a
more efficient manner. But, because of
Merchant’s location, the bank could
find no justification for establishing a
direct correspondent relationship.
Nevertheless, Mr. Kenyon said, as
the activities of the importer increased,
Merchants was able to justify the rela
tionship and to expand it.
Later, the importer began placing
orders with Chinese suppliers and Mer
chants was called upon by the corre
spondent to again assist with the es
tablishment of letters of credit that
were arranged through a third country
bank domiciled in the U. S. that traded
freely with China.
This case shows how a bank can
work with a downstream correspondent
or non-correspondent, either to sustain
established relationships or to develop
them.
• First National, Mobile, Ala., es
tablished its international department
in 1865. It is said to be the oldest in
ternational department in continuous
operation in the South.
The bank can assist in the develop
ment of the full potential of a foreign
market for a correspondent’s customer
through writing letters of introduction
and setting up appointments with po
tential buyers. The department can al
so obtain information regarding possi
ble exchange or customs regulations.
Archie Luckie, vice president, said
a correspondent’s customer in a neigh
boring city imports German clock
movements regularly and pays for them
in German marks. First National pur
chases the marks and is reimbursed by
the correspondent. The bank also pro
vides letters of credit applications for
customers importing items from over
seas, eliminating all need for the cor
respondent to handle the items. All the
correspondent does is sign a guarantee
agreement, which enables First Na
tional to deal directly with the corre
spondent’s customer.
The bank has been active in seeking
markets in several overseas areas, in
cluding Africa and South America.
• Commerce Union Bank, Nash
ville, reports that one of its correspon
dents in Alabama found it was missing
new accounts and losing business be
cause it had no international depart
ment, nor did it have access to interna
tional expertise through an affiliate.
According to Jerre Haskew, execu
tive vice president at Commerce Un
ion, the situation intensified when a
foreign firm set up shop in the corre
spondent’s city and another local bank
got the account. The other local bank
didn’t have an international depart
ment either, but one of its affiliates
did.
Commerce Union’s disappointed cor
respondent authorized the Nashville
institution to develop a system to en
able it to use Commerce Union’s inter
national services to develop its custom
er base.
Commerce Union trained one of the
correspondent’s people in how to identi
fy an international prospect. He was
taught to set up a communication
system on how to handle foreign busi
ness when it developed.
To effectively introduce the corre
spondent’s new capabilities to potential
customers, Commerce Union co-spon
sored an international trade seminar in
the correspondent’s city. About 30 po-
MID-CONTINENT BANKER for August , 1976
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Federal Reserve Bank of St. Louis
tential customers attended. Commerce
Union people helped the correspondent
follow up by making joint calls on the
prospects.
Now the bank in Alabama is active
ly going after international business,
using Commerce Union’s foreign cor
respondent network to offer transfer
services to foreign firms considering lo
cations in Alabama.
When one of the correspondent’s
largest depositors landed a large con
tract to sell its product to the govern
ment of Korea under letter of credit,
Commerce Union’s relationship with
the correspondent issuing the letter of
credit enabled the firm to receive pay
ment in its account with the Alabama
correspondent on the day it presented
documents to Commerce Union. This
eliminated the possibility that the firm
might open an account with another
bank to handle foreign receivables, Mr.
Haskew said.
• Manufacturers Hanover
Trust,
New York City, provides a wide range
of international banking services to its
domestic correspondents, according to
Martin Skala, senior staff writer.
The international division has assets
of more than $8 billion and contributes
approximately 50% of the bank s total
operating earnings. Its overseas corre
spondent network extends to more
than 1,500 banks in 112 countries.
In working with domestic correspon
dents, Manufacturers Hanover issues
export and import letters of credit, pro
vides foreign credit information and
handles foreign remittances and collec
tions.
In the foreign exchange area, the
bank can arrange for the hedging of
foreign exchange risks. In addition, the
foreign exchange advisory unit analyzes
currency relationships and engages in
short-term foreign exchange forecasts.
Through its branches, representa
tives and correspondents abroad, the
international division provides letters
of introduction and other assistance for
important customers of domestic cor
respondents.
• Fidelity Bank, Oklahoma City,
has designed its international services
to provide customers of correspondents
with a bank that is able to provide the
many services required to compete in
the international market.
David J. Montgomery, vice presi
dent, said Fidelity’s international de
partment will assist customers of corre
spondents with credit terms that are
required to make sales overseas. The
department works with the Export-Im
port Bank and the FCIA to assist on
export loans that can expand a firm s
41
overseas sales.
Mr. Montgomery is president of the
Oklahoma City International Trade
Club and works in cooperation with
the Oklahoma City University World
Trade Data Center, the Tulsa World
Trade Association, the International
Business Coordinator of the Oklahoma
Industrial Development Department
and the U. S. Department of Com
merce to provide customers with infor
mation that will assist in locating new
markets.
In addition, the bank provides as
sistance in obtaining credit information
on foreign firms and attempts to locate
markets through foreign correspon
dents.
• Liberty National, Oklahoma City,
illustrates how its international depart
ment assists customers of downstream
correspondents by citing the case of the
correspondent that had a customer who
wished to make a five-year loan in
Mexico for acquisition purposes. Sev
eral options were available to the cus
tomer insofar as the type currency to
be used was concerned, according to
Willis J. Wheat, senior vice president.
Currently, he said, the U. S. cor
porate customer borrowing in Euro
dollars from a U. S. offshore branch
bank must absorb an additional %% over
the cost of funds to compensate for the
lending bank’s 4% reserve requirement.
The same borrower is permitted, how
ever, to borrow direct from a foreign
bank without reserve penalty and
thereby lower the borrowing cost. In
this instance, the borrower sacrifices
local bank loan servicing and takes on
the risks inherent in a future borrow
ing relationship.
Alternatively, a borrowing in Mexi
can pesos for the acquisition would be
subject to the erratic movement of the
forward peso and subsequent difficulty
in covering the forward exchange. Or
a direct U. S. dollar loan would entail
normal balance requirements and could
have adverse effects on the bank’s
liquidity position during periods of
tight money.
After considering the alternatives,
Mr. Wheat said, the borrower decided
on a U. S. dollar loan, based on float
ing prime for the Mexican acquisition.
The loan agreement also provided an
option for funding in selected foreign
currencies as well as Eurodollars. The
multi-currency option would be con
sistent with favorable rate structures,
availability of funds and existing U. S.
government regulations, he said.
• Bank of Oklahoma, Tulsa, reports
that a downstream correspondent bank
having total assets of approximately
$30 million was requested by its cus42
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Federal Reserve Bank of St. Louis
tomer to issue a letter of credit in its
favor to be used for importing approxi
mately $100,000 worth of electronics
parts from Japan. Due to its size, the
letter of credit was not acceptable to
the exporter’s Japanese bank.
Accordingly, Bank of Oklahoma en
tered into a facility agreement, issuing
its letter of credit, which in turn was
supported by the correspondent’s letter
of credit, to the satisfaction of the
Japanese bank.
er with a need to set up a firm in Mex
ico to produce goods with economical
Mexican labor, First City National can
show the customer around in Juarez,
which is right across the border from
El Paso. The bank provides cost figures
and time variables to enable the corre
spondent’s customers to come to a deci
sion regarding the plant without having
to do research on their own.
• First National, Birmingham, Ala.,
has an international department that
works under the premise that a strong
foreign correspondent banking network
can be established only when there is
commercial activity, existing or developing, between businesses in Alabama
and firms in foreign countries. The bank
has initiated a calling program on in
dustry and other businesses throughout
the state to introduce them to inter
national markets. These calls are gen
erally made in conjunction with affiliates
or correspondents, and customers are
advised to coordinate their overseas
transactions through those banks as well
as through First National.
The bank assists local businesses by
helping them locate foreign markets
through overseas correspondents and
the Department of Commerce Agency/
Distributor program. It also assists in
obtaining credit information through
foreign banks and World Trade Direc
tory Reports. The bank conducts semi
nars to instruct customers how to quote,
ship and collect when serving over
seas customers. The bank has supplied
a director for two overseas trade mis
sions sponsored by the Department of
Commerce.
• United American Bank, Knox
ville, Tenn., is establishing an interna
tional department under the direction
of Michael B. Leader, who came to the
bank from Citibank (South Africa)
Ltd., Johannesburg.
The department’s personnel are in
volved in introducing the bank’s com
plete international services to down
stream correspondents at present. Dur
ing the introductory meetings with cor
respondents, Mr. Leader will explain
the bank’s international services and
will offer to participate in seminars for
customers of correspondents.
One of the services being offered is
for customers of correspondents who
find themselves stranded in foreign
countries. Correspondents are being
asked to inform their overseas-bound
customers to simply Telex United
American should they experience diffi
culty and ask United American to
transfer funds to a nearby foreign bank
that will enable the customer to return
to the U. S. All the customer must pro
vide in the way of information is his
passport number. Upon receipt of such
a call, United American would contact
the traveler’s bank to request the
funds, or it would debit the correspon
dent’s account. The only charge to the
• American National, Chicago, of
customer would be for use of the
fers the same international service to
Telex.
correspondents that it does to its com
• First City National, E l Paso, Tex., mercial customers, according to Benson
is in a unique position to clear peso
R. Culver, correspondent representative.
items due to its strategic location on
In addition to the usual assistance in
the Mexican border, according to Mar
the
international area, American Na
tin Nesbitt, vice president.
Most firms clearing pesos through tional can help in unusual ways, Mr.
Culver said. For example, banks in the
banks are charged exchange rates and
upper Midwest that were sending their
fees for each item, Mr. Nesbitt said,
but things are different at First City Canadian items directly to Canada for
National.
collection can send them to American
Checks for clearance funnel in to the National, where the bank’s check proc
bank from stores throughout the U. S.
essing system handles the items vir
They are processed at the bank and tually as it would a check drawn on a
cleared at par with no fees. The swift
U. S. bank. The system can provide
service provided by the bank eliminates
correspondents with two-day availabil
exchange charges. So, it’s worthwhile
for correspondents to send their collec ity of funds instead of the several
weeks involved when the items are sent
tion items to the bank, Mr. Nesbitt said.
Rather than the normal three-to-four- directly to Canada for collection. This
day clearance procedure, First City system also reduces mail costs and ex
National clears peso checks in one day.
change rate fluctuations, Mr. Culver
When a correspondent has a custom said. • •
MID-CONTINENT BANKER for August, 1976
South A frica is a lot o f good things.
Som e o f them you can im port. Profitably.
If you buy foreign consumer and industrial goods in
the first place you're looking for quality products at
prices that will allow for a profit somewhere along
the line.
We'll give you a better reason: Better products at
better prices and a better profit margin. The result
is you'll get a bigger competitive edge in your home
South A frica
For investment information contact:
The Minister (Economic), South African Embassy
2555 M Street, N.W., Washington, D.C. 20020
MID-CONTINENT BANKER for August, 1 976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
market than ever before.
Modern cities, bustling seaports, diamonds and
monuments to its past are just some of the things
South Africa is. What is most important to you is
what it can do for you —whether you buy or invest.
Find out by writing us at the addresses below. ,
For product information contact:
Deputy Consul General ( Commercial )
South African Consulate General
655 Madison Avenue, New York, N.Y. 10021
Consul General (Commercial)
South African Consulate General
225 Baronne Street, Suite 1616
New Orleans, La. 70112
43
Bl
Morgan Guaranty Trust Company
OF N E W
YORK
Consolidated statem ent o f eontiition d u n e itO. 1974i
D irectors
A ssets
ELLMORE C . PATTERSON
Cash and due from b a n k s ...................................$ 4 293 870 259
4 064 128 918
Interest-bearing deposits at b a n k s .......................
U. S. Treasury securities.........................................
1 360 865 343
Obligations of U. S. government agencies . . .
122 678 803
Obligations of states and political subdivisions .
899 053 561
Other investment securities...................................
442 536 057
Trading account securities, n e t .............................
205 047 416
Federal funds sold and securities
purchased under agreements to resell . . .
187 961 651
Loans, less reserve of $140 776 970 for
possible loan losses.............................................. 12 592 389 354
Premises and equipment, n e t .............................
118 725 347
Customers’ acceptance liability.............................
856 887 906
Other assets................................................................
785 414 567
Total asse ts................................................................$25 929 559 182
W A L T E R H. PAGE
President
J. P A U L A U S T I N
Chairman of the Board
The Coca-Cola Company
R. M A N N I N G B R O W N J R .
Chairman of the Board
New York Life Insurance Company
C A R T E R L. B U R GE SS
Chairman, Foreign Policy Association
F R A N K T. C A R Y
Chairman of the Board
International Business Machines Corporation
W . G R A H A M C L A Y T O R J R.
Liabilities
Demand d e p o sits .................................................... $ 6 653 117 642
Time d e p o s its ..........................................................
2 399 934 055
Deposits in foreign o f f ic e s ...................................
9 883 260 649
Total d e p o s its ..........................................................
Federal funds purchased and securities
sold under agreements to repurchase . . .
Commercial paper of a subsidiary.......................
Other liabilities for borrowed money . . . .
Accrued taxes and expenses...................................
Liability on acceptances.........................................
Dividend p a y a b le ....................................................
Convertible debentures of a subsidiary
(4 1 4 % , due 1 9 8 7 ) ...............................................
Capital notes (6 % % , due 1 9 7 8 ) .......................
Capital notes (5% , due 1 9 9 2 ) .............................
Mortgage p ay ab le....................................................
Other liabilities..........................................................
Chairman and Chief Executive Officer
Southern Railway System
E M I L I O G. C O L L A D O
Former Executive Vice President and Director
Exxon Corporation
18 936 312 346
C H A R L E S D. D I C K E Y J R.
2 664 143 509
80
838 583
963
860 942
355
593 506
860
677 900
25
000 000
Chairman and President
Scott Paper Company
J O H N T. D O R R A N C E J R.
Chairman of the Board
Campbell Soup Company
W A L T E R A. F A L L O N
President, Eastman Kodak Company
L E W I S W . FOY
50
100
84
14
417
000 000
000 000
074 997
862 607
346 326
Total Labilities.......................................................... $24 552 710 716
S torli li tddvr 's equ ity
Chairman, Bethlehem Steel Corporation
HOWARD W . JOHNSON
Chairman of the Corporation
Massachusetts Institute of Technology
R A L P H F. L E A C H
Chairman of the Executive Committee
J O H N M . M E Y E R JR.
Capital stock, $25 par value ( 10,000,000 shares ) $
S u r p lu s ......................................................................
Undivided p r o fit s ....................................................
Total stockholder’s e q u i t y ...................................
Total Labilities and stockholder’s equity .
Chairman of the Board
.
250 000 000
518 385 000
608 463 466
1 376 848 466
. $25 929 559 182
Assets carried at $2 354 018 000 in the above statement were pledged as
collateral for borrowings, to secure public monies as required by law, to
qualify for fiduciary powers, and for other purposes.
Member, Federal Reserve System, Federal Deposit Insurance Corporation
H O W A R D J. M O R G E N S
Chairman of the Executive Committee
The Procter & Gamble Company
D e W I T T P E T E R K I N J R.
Vice Chairman of the Board
LEWIS
T. P R E S T O N
Vice Chairman of the Board
D O N A L D E. P R O C K N O W
President
Western Electric Company, Incorporated
Nrir Y ork 23 W all Street, 522 F ifth A venue at 4 4 th Street,
616 M adison A venu e at 5 8th S treet, 40 R o c k e fe lle r Plaza at
50 th Street, 2 99 P ark A venue at 4 8 th Street
T H O M A S RODD
W e st Coast M organ G uaranty In tern ation al B an k o f
San F ran cisco, 400 M ontgom ery S treet, San F ran cisco, Ca. 94104
J O H N P.
Southw est M organ G uaranty In tern ation al B an k o f H ouston,
1100 M ilam S treet, H ouston, T ex a s 77002
Canada J. P. M organ o f C an ada L im ited,
25 King S treet W est, T oron to M5L 1G2
A broa d L on don , Paris, B ru ssels, A ntw erp, A m sterdam (B an k
M organ L a b o u ch er e N.V.) F ran kfu rt, D ü sseldorf, M unich,
Zurich, M ilan an d R om e (B an ca M organ V onw iller S.p.A.),
T oky o, S in gapore, N assau ; R ep resen tativ e offices in M adrid,
Beirut, Sydney, H ong Kong, M anila, Säo Paulo, C aracas
44
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Vice Chairman of the Board
SCHROEDER
Vice Chairman of the Board
WARREN
M.
SHAPLEIGH
President, Ralston Purina Company
GEORGE
P.
SHULTZ
President, Bechtel Corporation
O L C O T T D. S M I T H
Chairman, Executive Committee
Aetna Life and Casualty Company
MID-CONTINENT BANKER for August, 1976
This a e r ia l v ie w o f St. Louis
sho w s M a n c h e s te r/C h o u te a u In
d u s tria l
R e d e v e lo p m e n t C o rp .
{M C IR C )
are a
te r .
M a jo r
streets run
o u tlin e d
in
e x p re s s w a y s
th ro u g h
or
cen
and
near
a r e a , w h ic h is a n c h o re d
by
M a n c h e s te r
B a n k.
St.
Louis's
d o w n to w n a n d r iv e r fr o n t a re
a t to p o f m a p , a n d Forest P a rk ,
a m u n ic ip a lly
a t b o tto m .
ow ned
p a rk ,
is
Bank Puts Its M oney Where Its Mouth Is'
By Financing Redevelopment Project
RIVATE CORPORATIONS and in
dividuals are the key to curing
many of the social ills and stopping the
decay prevelant in many major U. S.
cities. Legislation and various levels of
government are not the answer. This
is what St. Louis’ Manchester Bank be
lieves, according to Executive Vice
President Hord Hardin II. For this rea
son, the bank is a strong backer of the
By ROSEMARY McKELVEY
M a n a g in g Editor
P
H o rd
H a rd in
I I,
e .v .p .,
M a n c h e s te r
B a n k,
St.
Louis, is a c tiv e fo rc e b e h in d M a n c h e s te r/C h o u
te a u In d u s tria l R e d e v e lo p m e n t C o rp .
Manchester/Chouteau Industrial Re
development Corp. (M C IR C ).
The $ 150-million bank is located
west of downtown St. Louis in a heav
ily industrialized section. What hous
ing is there is mostly substandard and
not salvageable. The area encompasses
Highway 40, a main artery linking St.
Louis from the downtown riverfront
all the way through the western part
of St. Louis County, finally connecting
with Interstate 70. In addition, it has
rail facilities and is close to Interstate
44, which goes through southwestern
St. Louis County and on to Tulsa,
Oklahoma City and beyond.
Despite these advantages, the Man
chester Bank area—like so many in
large cities across the country—was de
teriorating steadily, losing firms and
businesses to newly developed indus
trial parks in St. Louis County, which is
a separate political entity from St.
Louis city and is an aggressive com
petitor for firms and factories.
Fortunately, there was a group
called the Manchester-Chouteau Busi-
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
nessmen’s Association, which always
met at the bank. This association de
cided, in 1973, that positive action had
to be taken and taken quickly to re
verse this decay. As a result, ten cor
porations in the area formed the
MCIRC, with Joe Roddy, a former city
alderman and circuit court clerk, in
strumental in the formation. The group
set the objective of making building
sites available and attracting the inter
est of industries and other developers
in building new plants and expanding
existing properties in the Vandeventer,
Manchester and Chouteau area. Man
chester Bank’s Mr. Hardin has become
the driving force behind the corpora
tion. Besides doing his job at the bank,
he spends a lot of time on MCIRC
work.
The MCIRC took its idea to St.
Louis’ City Hall, and, eventually, the
aldermen approved a redevelopment
plan, which gave the corporation the
power of eminent domain and the
power to pass tax benefits on to rede
velopers under Missouri Redevelop
ment Law 353, usually referred to only
as “353.” This ordinance permits a re
developer to redevelop property in
such a manner that existing taxes on
45
Here’s how the MCIRC program
works: The M CIRC submits to the St.
Louis Board of Aldermen a redevelop
ment plan for a certain area. If the
aldermen approve this plan, they de
clare the area blighted, which makes it
eligible to be redeveloped under “353.”
The MCIRC acts as an “umbrella” cor
poration by working directly with each
developer, thereby saving the develop
er the need to go through City Hall. As
Mr. Hardin pointed out, this elimina
These fo u r b u ild in g s , a ll lo c a te d w ith in M a n c h e s te r/C h o u te a u In d u s tria l R e d e v e lo p m e n t C o rp .
b o u n d a rie s , illu s tra te h o w in d u s tria l a r e a can still be a ttr a c tiv e . TOP LEFT: U . S. Steel S u p p ly Co.
tion of red tape is another reason—be
TOP RIG H T: C rescent Electric S u p p ly Co. B O TTO M LEFT: Tom Boy, Inc. B O TTO M R IG HT: P e rfectio n
sides the tax-abatement incentive—to
M a n u fa c tu r in g Co.
locate in the MCIRC redevelopment
area. The MCIRC has helped develop
ers acquire property, and it also ac
quires property for inventory purposes.
By having the authority to approve
or disapprove a redevelopment plan,
the MCIRC can prevent any property
being put to what it calls “incompatible
uses. Such uses, as described by Mr.
Hardin, include a junk yard, outside
storage tanks, packing house or used
car lot.
The MCIRC also is empowered to
require every business in its area to
that property aren’t changed for 10 ents Welding, St. Louis Metalizing Co., keep its property up to at least the
minimum standards of the city’s build
years, no matter what’s built on the the Dailij R ecord (a legal newspaper),
ing
code. If someone doesn’t comply,
land. For instance, if taxes on a piece Crescent Electric Supply Co., Finclair
of property were $500 before it was re Redevelopment Corp. and Manchester the corporation can notify the proper
city authority about the violation. As
developed, they still would be $500
Bank. It should be pointed out that the
Mr. Hardin emphasized, it wouldn’t be
after being redeveloped under “353.” bank improved its property, including
fair to other businesses in the area that
Then for 15 years after the first 10 the laying out of a small parklike area,
are maintaining their property to find
years, taxes are assessed at 50% of the without the help of the MCIRC, and
themselves adjacent to or across the
normal rate. In other words, “353” of Pepsi-Cola completed its expansion
street from a person who lets his prop
fers a 25-year tax incentive.
program before the corporation was erty deteriorate.
The MCIRC has an added advan formed. In addition, the MCIRC has
Since the MCIRC began operations,
tage: It can offer tax savings not only acquired other building sites and de Manchester Bank has loaned more than
through “353,” but also under the molished numerous eyesores.
SI million to area businesses to finance
Planned Industrial Expansion Authority
The MCIRC has a problem, accord their expansion programs. In addition,
(P IE ) of St. Louis. In fact, at present ing to Mr. Hardin, but it’s a g ood prob
the bank has established in favor of the
the MCIRC is the only redevelopment lem: The corporation has done such a MCIRC a $300,000 unsecured revolv
corporation in the state operating un successful job of redeveloping its land ing credit on an interest-free basis to
der “353” and/or PIE. Working under that it has run out of sites that are two finance acquisitions of redevelopment
PIE helped the corporation bring a or more acres in size. It’s this size and
sites.
new plating business—Finclair Rede larger that’s much in demand, he con
The redevelopment corporation has
velopment Corp.—into the area. Man tinued. Therefore, the coiporation,
incurred operating losses of approxi
chester Bank bought the entire $ 1.3- sometime in the future, plans to ask the mately $30,000 since its inception, but
million industrial revenue bond issue aldermen to widen the boundaries so Mr. Hardin believes that losses will be
that financed Finclair.
that it can put together larger sites.
recovered in the near future. Even
The MCIRC started operations early
though the bank would take a small
in 1974, with Manchester Bank provid
loss on its loan to the MCIRC if opera
ing the financing. In fact, one aidertions were to cease at this time, he said
man indicated that the corporation
this money was well spent because the
would not have been approved if Man
area has been stabilized and, in fact, is
beginning to recover.
chester Bank had not been behind it
and willing to make money available,
Although the MCIRC program is fo
said Mr. Hardin.
cused on promoting industrial develop
The corporation is less than two
ment, Mr. Hardin believes that to be
years old, but already has produced
viable, an industrial area must have
more than $5 million in new construc
decent housing around it because peo
tion, which has stabilized the area.
ple want to live close to their jobs. In
This amount doesn’t include the $ 1.3this regard, the MCIRC is fortunate to
million plating firm project or two pro
be located near several redevelopment
posed redevelopment plans that will
projects, including a mammoth one to
total $500,000. These projects will
the west being sponsored by the Wash
These old b u ild in g s in M C IR C a r e a w e r e re
complement those already completed
ington University Medical Center and
d e v e lo p e d in to a ttr a c tiv e to w n h o u s e s b y A . J.
by Pepsi-Cola, Tom Boy, Inc., Clem
which will include rehabilitation of
C e rv a n te s Jr., son o f f o r m e r St. Louis m a y o r.
46
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Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for August, 1976
NATIONAL DETROIT CORPORATION
a r ] Parent Company of
JÖJ NATIONAL BANK OF DETROIT
C O N S O L ID A T E D B A L A N C E S H E E T - J u n e 30,1976
A SSETS
Cash and Due from Banks (including
Foreign Office Time Deposits
Of $764,877,825) . . .........................
$2,136,543,112
Money Market Investments:
Federal Funds S o ld .........................
495,375,000
8,903,754
Other Investments...........................
504,278,754
Trading Account Securities—At Lower
of Cost or M a rke t...................
5,628,955
Investment Securities—At Amortized
Cost:
U.S. Treasury...................................
470,624,830
States and Political Subdivisions...
799,336,504
Federal Agencies and Other............
32,467,567
1,302,428,901
Loans:
Commercial.....................................
1,702,579,185
Real Estate Mortgage.....................
796,997,096
Consumer ......................................
239,054,081
Foreign O ffic e .............., .................
428,999,089
3,167,629,451
Less Reserve for Possible Loan
Losses ........................................
52,194,064
3,115,435,387
Bank Premises and Equipment (at cost
less accumulated depreciation of
$39,229,540) ...................................
66,514,222
Other Assets ......................................
155,962,916
Total A sse ts.....................
$7,286,792,247
L IA B IL IT IE S AND S H A R E H O L D E R S ’ EQ U IT Y
Deposits:
Dem and........................................
Certified and Other Official Checks
Individual Savings.........................
Individual T im e .............................
Certificates of Deposits...............
Other Savings and T im e ...............
Foreign O ffic e ...............................
Other Liabilities:
Short-Term Funds Borrowed........
Capital Notes ................... ...........
Sundry L ia b ilitie s.........................
Total Liabilities ..................
Shareholders’ Equity:
Preferred Stock—No Par Value
No. of Shares
Authorized
1,000,000
Issued
—
Common Stock—Par Value $12.50 ..
No. of Shares
Authorized 10,000,000
Issued
6,000,000
Capital S urplus...............................
Retained Earnings...........................
Less: Treasury S tock51 ,404 Common Shares, at cost
Total Liabilities
and Shareholders’ Equity
President
Norman B. Weston
Vice Chairman of the Board
A. H. Aymond
C hairm anConsumers Power Company
Henry T. Bodman
Former Chairman—National Bank of Detroit
Harry B. Cunningham
Honorary Chairman of the Board—
S. S. Kresge Company
David K. Easlick
President—The Michigan Bell
Telephone Company
Richard C. Gerstenberg
Director and Former Chairm anGeneral Motors Corporation
Martha W. Griffiths
Griffiths & Griffiths
John R. Hamann
President
The Detroit Edison Company
Robert W. Hartwell
President—Cliffs Electric
Service Company
Joseph L. Hudson, Jr.
Chairman—
The J. L. Hudson Company
Walton A. Lewis
President—Lewis &
Thompson Agency, Inc.
Don T. McKone
Former Chairman—National Bank of Detroit
Arthur R. Seder, Jr.
President—
American Natural Resources Company
Robert B. Semple
Chairman—BASF Wyandotte Corporation
Nate S. Shapero
Honorary Chairman and Director
and Chairman of Executive Committee—
Cunningham Drug Stores, Inc.
George A. Stinson
Chairman—National Steel Corporation
100, 000,000
801,211,182
6,839,116,336
Peter W. Stroh
President—The Stroh Brewery Company
ADVISORY MEMBERS
Ivor Bryn
Former Chairman—McLouth Steel
Corporation
75,000,000
William M. Day
Former Chairman—The Michigan Bell
Telephone Company
175,000,000
199,993,254
(2,317,343)
A. P. Fontaine
Former Chairman—
The Bendlx Corporation
447,675,911
$7,286,792,247
Outstanding standby letters of credit at June 30, 1976, totaled approximately $19,800,000.
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Charles T. Fisher, III
Ellis B. Merry
$1,873,962,579
350,041,741
1,339,793,151
763,649,697
551,308,878
122,426,929
1,036,722,179
6,037,905,154
Assets carried at approximately $419,000,000 (including U.S. Treasury Securities carried at
$58,000,000) were pledged at June 30, 1976, to secure public deposits (including deposits of
$126,924,007 of the Treasurer, State of Michigan) and for other purposes required by law.
MID-CONTINENT BANKER for August, 1976
Robert M. Surdam
Chairman of the Board
President—
Libbey-Owens-Ford Company
$ 536,404,769
164,806,413
BO ARD O F D IR E C T O R S
Ralph T. McElvenny
Former Chairman—
American Natural Resources Company
Peter J. Monaghan
Monaghan, Campbell, LoPrete & McDonald
George Russell
Former Vice Chairm anGeneral Motors Corporation
47
houses and multiple-family dwellings.
Going up nearby is a new Blue CrossBlue Shield headquarters building. St.
Louis University, to the east, has an
nounced a redevelopment program,
which also will include housing. Mill
Creek Valley, also close to the MCIRC
area, was developed successfully sev
eral years ago and includes moderatepriced apartments. In fact, Robert
Saunders, who put the Mill Creek pro
gram together and managed its day-today affairs, is serving as part-time con
sultant to the MCIRC.
Manchester Bank, Mr. Hardin point
ed out, is a strong MCIRC supporter
because it believes in being a good
citizen and in sharing civic responsi
bility. The bank applauds the support
that downtown St. Louis banks are
giving projects in their area— the Con
vention Center, Laclede’s Landing on
the riverfront and LaSalle Park on the
near south side. However, Manchester
Bank also believes St. Louis cannot sur
vive in the long run if only the area
east of 12th Street is redeveloped. This
is where the smaller banks come in—
by giving financial support to redevel
opment of other areas within the city,
all of which eventually can be tied to
gether and produce beneficial impacts
on one another. Mr. Hardin believes
that Manchester Bank is the recognized
leader of this latter group. Following
its pioneering efforts, at least four other
mid-town St. Louis-area banks began
sponsorship of redevelopment corpora
tions. * *
D eteriorating C ity Returns to Life
Through Efforts o f Local Banker
By DANIEL H. CLARK
Editorial Assistant
aplew ood
,
m o .,
is located on
M the western edge of St. Louis.
Once a major shopping area, Maple
wood began to experience the onslaught
of blight and the suburban migration
to western St. Louis County. It was, for
all intents and purposes, dead, rapidly
deteriorating into a slum area.
But, thanks to the foresight and per
severance of James O. Holton Jr., presi
dent of Citizens National, Maplewood,
the city’s outlook is rosy. There now are
K-Mart and Venture stores there, with
more to come.
Located on Manchester Road, which,
since the early 1800s, had been the main
road between St. Louis and Jefferson
City, Missouri’s capital, Maplewood
had attracted shoppers from all over
the St. Louis area. But by the late
1950s, many of the shops and homes in
the area had become run down. In
1965, when Golde’s, the area’s major
department store, burned down, no one
would build on the site. Said Mr. Hol
ton, “All I had to do to a prospective
new business was mention ‘Maple
wood’ and it was like the kiss of death.
No one wanted anything to do with
the town.”
But Mr. Holton believed in Maple
wood. Its central business district is
within two minutes of two major high
ways, and 350,000 people with a
spending capacity of $10 million live
within five miles— or 10 minutes—of
the area. Mr. Holton tried to sell the
spot left by Golde’s to all of the St.
Louis area’s major retailers, but in vain.
A talk with officials of the S. S.
Kresge Co. led Mr. Holton to believe
that if parking in Maplewood were
48
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Federal Reserve Bank of St. Louis
available, K-Mart, which is Kresge’s
discount operation, would be interested
in locating there. The town’s voters
passed a bond issue to tear down the
burned-out department store and on
its site build a $3-million, 900-car park
ing garage. Sales taxes from the K-Mart
would pay for the garage.
“Due to the garage and K-Mart,”
Mr. Holton said, “Venture came in, and
with the Venture store came a new
park.” Since the May Co., Venture’s
parent, built the store on the site of the
old Legion Park, part of the agreement
was that the company would build a
new park for the city.
Another major stumbling block has
been overcome, due partly to the con
tinued efforts of Mr. Holton. Under
Missouri Redevelopment Law 353—
known as “353”—individuals may set
up a redevelopment corporation, and
the corporation then gets rights of
eminent domain. Also part of “353” is a
25-year tax incentive, wherein the land
to be developed is taxed at pre-de
velopment rates for the first 10 years
and at 50% for the next 15 years. The
catch was that in order to qualify for
“353,” a city had to have a population
of at least 20,000. Maplewood has 12,000 residents. An amendment lowering
the qualifying figure to 4,000 soon will
be on the books.
Plans are for a giant, campus-style
shopping center, one of a size that
would rival St. Louis’ Northwest Plaza
— said to be the world’s largest shop
ping center.
The business situation in Maplewood
has turned around. “The Maplewood
project is a ‘people generator,’ ” Mr.
Holton noted. “There has been a trend
for people to move away from the sub
urbs and to rebuild in the inner cities,
Jam es
O.
H o lto n
M a p le w o o d ,
to w n 's
M o .,
m a y o r,
Jr.
(I.)
to asts
Josef
p res.,
fu tu re
H a m m es .
C itizen s
of
N a t'l,
city
w ith
T h rou gh
M r.
H o lto n 's effo rts, 9 0 0 -c a r p a r k in g g a r a g e w a s
b u ilt a d ja c e n t to b a n k , resu ltin g in construc
tio n
of
K -M a r t
a r e a , w h ich
fo r
store a n d
once w a s
re n e w e d
in te re st
m a jo r s h o p p in g
in
district
citizens o f St. Louis a r e a .
and that’s just what’s begun to happen
here. An increasing number of people
have begun to buy homes and apart
ments in Maplewood and renovate
them.
“As bankers who read M i d - C o n t i
n e n t B a n k e r will agree,” Mr. Holton
continued, “banking is becoming a
‘people’ business more and more every
day. And the redevelopment of Maple
wood has meant much new business for
Citizens National.”
In one six-week period, he noted,
new accounts at the bank totaled 223—
122 checking and 101 savings. “Of
those,” he said, “147 new accounts
came from St. Louis County residents
and only 76 from people living in St.
Louis. That trend has continued, too.
Most of the bank’s new accounts are
opened by people under 30; we are
experiencing a return of young clients.”
MID-CONTINENT BANKER for August, 1976
'i l u >
lüll
is for Attention.
Which is what you get plenty of from an Integon representative. Even after
he sets up your program and makes sure everything is running smoothly, he
still pays regular visits. To keep things that way. And if you need him in-between times, a
call will bring him on the run.
A is also for Ability and Assistance, two more things you get with our representative.
He s a specialist in his field. Yet, he knows enough about your business to talk on your
terms. He trains your new personnel. He furnishes all the supplies you need: payment
charts, forms, certificates — even a thorough Reference Manual detailing the entire Integon
program. And all the paperwork is designed for quick and easy completion by loan officers,
not underwriters.
A is for Accounting, too. Because we can
send you a monthly computerized status report
which shows your commissions, claims, premium
income by branch and by month, plus year-to-date
totals and aggregate totals since the beginning of
your contract. So you'll know exactly where you
stand.
And finally, A is for Attitude. You 11 like ours,
especially the way our representative works close
ly with you. To improve market penetration, cut
the loss ratio, and make your whole operation as
easy and profitable as possible.
To find out more, just place a collect call to
J. Wayne Williard, dr., Vice-President, Credit
Insurance, at 919/725-7261. Or write him at Integon
Life Insurance Corporation, P O . Box 5199,
Winston-Salem, N. C. 27102.
And get him to give you the rest of our
alphabet.
J. Wayne Williard, Jr., Vice-President
¡4) INTEGON’
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
49
Mercantile Bank, St. Louis, Backs Renovation of Once-Popular West-End Area
HE D eBA LIV IER E “strip” in St.
Louis’ west end once was a popular
restaurant and residential section of the
city, but over the years blight set in,
driving away customers, businesses and
residents.
Where restaurants and shops once
operated on DeBaliviere Avenue, the
only “attraction” today is a seedy bur
lesque house. The once-stately turn-ofthe-century residences have been al
lowed to deteriorate and—accompany
ing that deterioration—came crime and
drug trafficking. But through the efforts
of Leon Strauss and his firm, Pantheon
Corp., along with the backing of Mer
cantile Bank, the area’s future is prom
ising.
The 106-acre tract is bordered by
Forest Park and is easily accessible
from the Forest Park Parkway, a major
artery linking St. Louis County and
the downtown area. The DeBaliviere
area is 15 minutes from St. Louis’ cen
tral business district and five minutes
from Clayton, a major business section
in the county. Bounding the DeBali
viere area are hospitals and two major
schools, Washington University and St.
Louis University. Many desirable sin
gle-family residences surround the proj
ect, and parochial and private schools
are nearby.
According to Donald B. Wehrmann,
Mercantile senior vice president, the
plan began about four years ago, when
Mr. Strauss acquired development
rights from two groups that originally
had hired him as contractor for their
projects in the area. “The trouble with
the two projects,” Mr. Wehrmann in
dicated, “was that they were like is
lands in the middle of a large slum—
people would have balked at living
there or at rehabilitating buildings
there.” “I became leery of their possi
bilities for success,” Mr. Strauss added,
since they didn’t control the entire
area. I began to think of a project in
volving the whole tract, bought out
their stock and got development rights.”
Part of those rights is the Missouri
Bedevelopment Law 353, known sim
ply as “353.” It gives the developer
control over the subject area so build
ing owners won’t allow blight to set in
and so an incompatible business— such
as a junk yard—won’t be allowed to
operate in an area. “Pantheon Corp.
has the authority to enforce minimum
property standards,” Mr. Strauss said.
“It can condemn and buy blighted or
substandard property—and Pantheon
fully intends to use that right.”
T
50
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Federal Reserve Bank of St. Louis
By DANIEL H. CLARK
Editorial Assistant
What’s more, “353” offers a 25-year
tax incentive to the developer: For the
first 10 years, taxes remain at pre-de
velopment levels; for the remaining 15
years, the tax rate is 50% on the im
provements. In addition, Pantheon
Corp. can grant rights of tax abatement
to building owners who wish to ren
ovate, but owners must sign an agree
ment to get those rights.
“Front money” for the venture came
from Mercantile Bank. The bank loaned
$3 million, while Mr. Strauss had to
come up with $1 million. Of that $1
million, General American Life agreed
to provide up to $400,000 in equity,
while friends, family and acquaintances
of Mr. Strauss so far have contributed
Urban Study G rant
ST. LOUIS— Mercantile Bancorp.,
Inc., parent HC of Mercantile Bank,
has made an $80,000 grant to Wash
ington University to study how to
help America’s shrinking cities.
The school’s Institute of Urban
and Regional Studies, recipient of
the grant, will hold a national sym
posium on human, private and pub
lic investment opportunities in met
ropolitan areas.
The symposium has been slated
for June, 1977, and will commission
10-12 leading authorities on urban
economics and development policy
to present papers on metropolitan
development without population
growths.
According to Charles L. Leven,
director of the institute and chair
man of Washington University’s de
partment of economics, the sympo
sium will:
• Review factors leading to pop
ulation declines and the possibilities
of those factors continuing as future
influences.
• Investigate strategies for de
termining the best opportunities for
metropolitan development under
current conditions.
• Explore possibilities of bene
ficial cooperative relationships among
the segments of a stable metropoli
tan community.
• Draw a broad view of the
quality of life, the role played by
neighborhoods and suburbs, eco
nomic activities and the role of
local government in the metropolis
that is emerging.
another $350-360,000 in subordinated
debentures.
“The problem with the area is that
the valuation of the real estate is ques
tionable,” Mr. Strauss noted. “No one
wanted the land and its value will have
to be created. The city’s aldermen al
ready had declared it blighted and, of
200-or-so families living there, only
about 10% were owners, so obtaining
development rights was no real prob
lem.”
No renovation will begin in the area,
Mr. Strauss said, until after the city—
through a $1.5-million Community De
velopment Agency grant— has redone
DeBaliviere Avenue. The present eightlane street will be changed to four
lanes, with widened sidewalks and a
planted median.
“Once that’s done—which should be
sometime after spring of 1977—people
will be able to see what can be done
with the area,” Mr. Strauss revealed.
What is in store for the DeBaliviere
area after that? A number of mini parks
and off-street parking areas are planned.
Besides the “new” street itself, about
70 multi-family buildings containing
864 dwelling units will be rehabilitated
and marketed for rent and for sale.
The character of the buildings’ exterior
architecture will be retained. In addi
tion, on the west side of DeBaliviere,
where whole city blocks have been
cleared through city demolition of de
teriorated and dangerous buildings,
250-300 single-family attached townhouses will be constructed. Serviceoriented businesses also will dot the
area: “pub”-type bars, restaurants,
hardware, furniture and food stores.
“In fact,” said Mr. Strauss, “the layout
of one building would be perfect for a
bank facility or S&L branch.
“Plans also have been made for our
own area schools,” he continued.
“Schools can be financed from earnings
and an ad valorem tax on the dwelling
units. We want to provide services that
St. Louis finds it difficult to provide:
schools, recreation and security.” • *
• A. W. Clausen, president, Bank
of America, and president and CEO,
BankAmerica Corp., both of San Fran
cisco, has been installed as presi
dent, International Monetary Confer
ence (IM C ). Anthony Favill Tuke,
chairman, Barclays Bank, London, has
been named IMC vice president. The
IMC is administrated by the ABA and
comprises 58 U. S. and 58 non-U. S.
banks.
MID-CONTINENT BANKER for August, 1976
Fourth people.
Our biggest asset.
Statem ent of Condition as of June 30,1976
Assets
Cash and due from banks............................ $ 87,147,827.50
Investment securities:
U.S. Government obligations................. 21,496,075.71
Obligations of states and political
subdivisions............................................... 53,018,395.54
Trading account and other securities . 28,871,925.90
Federal funds sold ...................................
15,300,000.00
Securities purchased under
agreementstoreseil ................................. 16,500,000.00
Loans .................................................................... 234,773,153.56
Bank premises and equipment ................. 26,800,024.02
Other assets ......................................................
6,433,707.41
$490,341,109.64
Liabilities and Stockholders' Equity
Deposits:
Demand ...........................................................$198,221,281.67
Time .................................................................. 173,431,917.97
Total deposits................................. 371,653,199.64
Federal funds purchased............................... 27,350,000.00
Securities sold under
agreements to repurchase..................... 36,475,255.39
Other liabilities ..................................................
4,901,176.76
Subordinated capital note, due 1981 . . 10,000,000.00
Total liabilities................................. 450,379,631.79
Stockholders' equity ...................................... 39,961,477.85
$490,341,109.64
Our employees' dedication combined
with their friendly spirit are what make the
Fourth — The Fourth. They are neighbors
helping neighbors.
W e're proud of that.
A neighborhood bank
as big as Kansas itself.
TheFourth
FOURTH NATIONAL BANK & TRUST CO. W ICHITA, KA NS AS 67202 / MEMBER FDIC
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
51
Bank Leads Reconstruction
Bank O ffers Space fo r Doctor's O ffice
So Com m unity Can Have Its O w n M.D.
A CCORDING
to the most recent
census, the population of Puxico,
Mo., is under 800. Yet the residents of
that community in the southeastern
portion of the state are joining hands
with Puxico State Bank in an expensive
undertaking to remedy a situation that
has plagued the community for several
years—the lack of a physician.
Residents needing medical assistance
have had to travel to places like Poplar
Bluff since Puxico has been without a
physician. The situation has been espe
cially trying on the community’s elder
citizens, who have been forced to se
cure transportation every time they
visit a doctor.
The town’s mayor, Eddie Sifford,
who is now a director of Puxico State
Bank, made up his mind to secure a
resident physician for the community.
He found one who was willing to make
the move, but there were complications
that posed a formidable challenge to
the citizens of Puxico.
The doctor was operating in a Poplar
Bluff hospital. Thus, he had no equip
ment of his own. In addition, he re
quired an office of approximately 1,800
square feet and no such accommoda
tions existed in Puxico that were suit
able.
Estimated cost of the equipment was
$25,000. Mayor Sifford and other com
munity leaders banded together to
form the Puxico Development Corp.
to raise funds for the equipment. At
the first meeting of the corporation—
P uxico's
new
resid en t M .D .,
Dr. John
S ta te B ank. B u ilding w ill in clu de
a
resid en t
p h y s ic ia n .
O th e rs
in
H u n t,
to which all residents were invited—
$6,000 was pledged toward the equip
ment’s cost.
About that time, Puxico State Presi
dent M. Gene Shain made an offer to
the community that couldn’t be refused
—the bank would include space for the
doctor’s office in plans for its new
building, which was to be constructed
this summer and completed by Octo
ber.
Moreover, the 1,800-square-foot of
fice would be offered to the doctor
rent-free, providing the city of Puxico
deposited $50,000 in interest-free cer
tificates at the bank. Mr. Shain says the
deposit is strictly a gentlemen’s agree
ment— the funds can be withdrawn at
any time.
The bank has not contributed to the
equipment fund, but two of its direc
tors have made sizable donations. As
the money comes in, it is being expend
ed on equipment to be installed in the
new office.
Puxico’s new resident physician, Dr.
John Hunt, is in family practice and
is an eye, ear, nose and throat special
ist. He and his wife will reside in
Puxico.
Ground was broken for the new
bank/doctor’s office building on May
21, the 20th anniversary of the bank’s
opening. The new building will con
tain approximately 5,700 square feet
of space, with the bank occupying
3,900 square feet. * *
w ie ld s
sho vel
at
p h o to
a re
(fro m
I.)
D o n a ld
M . S. S h a in , a ll Puxico S ta te d irectors; M . S. S h ain, ch.; Larry
m a y o r; D a v id S. S h ain , b a n k v .p .; a n d M . G en e S h ain , pres.
52
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
g ro u n d b r e a k in g
1 ,8 0 0 -s q u a re -fo o t d o c to r's office, e n a b lin g
D e n n y,
O.
of
Puxico
co m m u n ity
O.
B u ttry, co n tra c to r:
C o nstru ction
o f th e
new
M a in
O ffice
of
Can
ton (III.) State has been a u th o r iz e d . The b u ild
ing w ill be the first to be con structed u n d e r a
m a s te r re b u ild in g p la n sponsored
m u n ity
to rn a d o
to
in
re p la c e
1975.
structures
The
by the com
d e s tro y e d
tw o -s to ry
by
b u ild in g
a
w ill
be o f brick a n d w ill fe a tu r e so lar b ro n ze glass
p an e ls in arch e d settin g s. P la n n in g , d es ign
and
construction
a re
b e in g
C o rp ., St. Louis. The b a n k
h a n d le d
by
Bunce
has been o p e ra tin g
out o f te m p o r a r y q u a rte rs since th e to rn a d o ,
u tiliz in g
th e
v a u lt
o f its fo r m e r
b u ild in g ,
w h ic h s u rvived
th e d isaster.
Bank in Dallas Honored
For Improvement Loans
Lakewood Bank, Dallas, has been
cited for its significant contribution to
the revitalization and environmental
improvement of the East Dallas area
by the Dallas Chapter of the American
Institute of Architects.
The bank and its president, Don
Wright, were lauded for personal and
corporate efforts that “can be measured
in terms of rising property values, new
construction, historic restoration, influx
of new families and, above all, in
creased community pride.”
The bank has invested some $4 mil
lion in loans to upgrade and improve
homes in the East Dallas area. The in
vestments came about because of con
cern about the condition of housing in
the once-fashionable area.
Of the $4 million, $1 million was
made available for purchase of older
homes in Dallas’ first historic district,
$1 million for purchase of homes in the
surrounding area and $2 million for
home improvement loans. The bank’s
lead has been followed by a few other
lenders.
“Revitalization and preservation of
older areas and bringing in more young
people is economic good sense,” Mr.
Wright has said. “W e’re not after the
loan. What we’re after is improvements
in the area. If the neighborhood goes
down, we go with it.”
Mr. Wright has also committed the
bank to make loans at favorable inter
est rates to remodel commercial build
ings in the shopping center at which
the bank is located.
(M o .)
to
have
M en ees ,
M rs .
E ddie S iffo rd ,
MID-CONTINENT BANKER for August, 1976
RABBIT TRANSIT.
r i
An
advanced
check-clearing system that
can dramatically improve
your availability ot funds.
Reserve Headquarters and
“Rabbit Transit.” It’s an
improved system devised by
First National Bank in St. Louis
to expedite the clearing of cash
letters.
For you, it can mean two
important things: better avail
ability and bigger profits.
Here’s how.
International Airports in
Chicago and Kansas City.
Our computer is
totally dedicated.
It’s the latest Burroughs
computer system with IPS and
MICR technology.
It’s used exclusively by our
transit operation. And delays
We’re right in the heart
do not occur because of con
of the nation.
flicting priorities or competi
That’s more important than tion for computer time.
Our Proof-of-Deposit
you might realize. Our location
in the heart of Middle America system computes float on each
permits ideal transportation into item processed by endpoint
and time of day.
and out of St. Louis and pro
Full-time specialized staff.
vides a superior transportation
network to all Federal Reserve
This staff monitors out
cities.
going transit and keeps current
In addition, St. Louis is a
with any changes in transporta
Federal Reserve city which
tion scheduling. Volumes and
enjoys a proven advantage in
endpoints are monitored con
mail times, and is less than one tinually so cash letters clear
hour by air from Federal
efficiently.
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
With their up-to-the-minute
knowledge, our specialized staff
can also make a complete and
objective analysis of your check
clearing system after an
appropriate test period. Then,
they’ll present a written recom
mendation of how it can be
handled with increased speed
and efficiency.
Phone (314) 342-6222
for your own transit analysis.
For a copy of our Avail
ability Schedule, to arrange for
an analysis of your check
clearing system, or for more
information about “Rabbit
Transit,” phone us now. Or
contact your Correspondent
Banker at 510 Locust, St. Louis,
Missouri 63101.
First National Bank
in S t. Louis HI I H I
Member FDIC
53
Renovation in 4Gay ’90 s’ Style
Ensures Good Future for Town
HE CENTURY-OLD town square
in Harrisonville, Mo., nearly died
a few years ago. Today it bustles with
activity.
Located 35 miles south of Kansas
City, the square, with the Cass County
Courthouse at its core, is a newly re
vived retail/services center, one that
sports the architectural look of an
earlier America.
The change has come swiftly, pro
ducing tangible results and a ground
swell of community pride and commit
ment. “Business had been declining for
a number of reasons,” said Jordan
Lindsey, president of the town’s Allen
Bank. “There was a possibility that the
square would cease to exist as a com
mercial hub.”
Today, despite competition from
modern, massive shopping centers 1830 miles away, Harrisonville’s historic
square holds its own as both shopping
area and focal point for community
life. People from as far away as 25
miles shop it daily; merchants report
1975 as one of their best business
years.
But five years ago the square was
deteriorating. Blight was evident, sev
eral stores were vacant, some buildings
were badly in need of repair and the
courthouse itself was grimy with ne
glect. There was little inside the shops
to attract customers. Merchandise was
second- and third-quality, poorly dis
played, poorly lighted and clerks were
few and not always trained.
What the area did attract were
T
Cass C o u n ty C o u rth o u se is a t cen ter o f s q u are
in H a rris o n v ille , M o . Erected in 1 8 9 7 , b u ild in g
d o m in a te s a r e a , w a s re n o v a te d in 1 9 7 5 a t
cost o f $ 4 2 ,0 0 0 as p a r t o f to w n s q u a re r e s to ra
tio n .
groups of hippie types who covered the
square—as one resident put it—“like
grasshoppers,” lounging against store
fronts and on the courthouse steps,
roaming the streets, smoking, drinking
and generally making nuisances of
themselves.
“We suspect they picked the square
as a campground for drug trafficking,”
said Mr. Lindsey. “We are close
enough to Kansas City as a source, yet
far enough from its police jurisdiction.
“The hippies began showing up in
the late ’60s and early ’70s,” Mr. Lind
sey noted. “Some of our residents were
hostile to them, others afraid of them.
The effect was harmful to business;
fewer and fewer people shopped the
square.”
In April, 1972, tragedy struck. A
young transient went berserk and shot
up the square, killing three people and
wounding several others before com
mitting suicide.
Outraged, local citizens drove out
the hippies.
But it was too late. Shoppers avoid
ed the square and business dropped
abruptly.
Something had to be done quickly
or the town square would cease to exist
as a place of business and community
activity. Three months after the shoot
ings, a meeting was held at Allen Bank
to try to improve the situation. The
Square Center Merchants Association
(SCMA) was formed and a committee
elected to make recommendations for
improvements.
“The SCMA told us we had three
options,” Mr. Lindsey recalled, “one,
modernize the exteriors of the stores
to attract shoppers, hopefully encour
aging interior renovations; two, restore
building exteriors to their original con
ditions, creating a kind of VictorianAmerican shopping center; or, three,
do nothing and hope for the best.”
Then, United Telephone Co., the lo
cal supplier, called the SCMA’s atten
tion to Albia, la., a former mining
town that also had faced deterioration
and loss of business in its central dis
trict. Albia had restored its commercial
buildings, resulting in tourists and resi-
In te rio r shot o f H a rris o n v ille ,
V ie w o f one side o f H a rris o n v ille , M o ., to w n s q u a re illu s tra te s h o w o n c e -b lig h te d b u ild in g s h a v e
bee n re sto red to o rig in a l " G a y '9 0 s " a p p e a r a n c e . The result? A business r e b irth in a r e a .
54
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
re s to ra tio n
w ith n e w :
e x e m p lifie s h o w
c a rp e tin g , m e ta l
M o ., store a f te r
old is com b in ed
ceilings, m o d ern
d is p la y fix tu re s , a n tiq u e d e c o ra tio n s .
MID-CONTINENT BANKER for August, 1976
CONDENSED STATEMENT OF C O N D ITIO N
AS
OF JU N E 3 0 , 1 9 7 6
RESOURCES
Cash and Due from B a n k s .......................................................................................
U. S. Treasury S e c u ritie s..........................................................................................
U. S. Government Guaranteed S e c u ritie s...............................................................
Obligations of States and Political S u b d ivisio n s...................................................
Stock in Federal Reserve B a n k .................................................................................
Federal Funds Sold and Securities Purchased Under Agreements to Resell . . .
Loans .........................................................................................................................
Less: Valuation Portion of the Reserve For Possible Loan L o s s e s ..................
Bank Premises and E q u ip m e n t.................................................................................
Other Real E sta te .......................................................................................................
Customers’ Acceptance L ia b ility..............................................................................
Accrued Income R e ce iva b le .....................................................................................
Other A s s e t s ..............................................................................................................
T O T A L ....................................................................................................................
$
168,358,541.64
360,281,987.72
60,009,428.01
55,360,334.35
1,500,000.00
20,400,000.00
550,822,562.88
6,632,097.12
544,190,465.76
9,128,779.37
48,512.46
72,505.82
11,859,871.83
8,059,963.03
$ 1,239,270,389.99
LIABILITIES
Deposits .....................................................................................................................
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
Acceptances O utstandin g..........................................................................................
Dividend Payable July 1, 1976 .................................................................................
Special Dividends P a ya b le .......................................................................................
Accrued Taxes, Interest and E xp e n s e s ...................................................................
Deferred Income Tax Portion of the Reserve For Possible Loan L o s s e s .............
TO TA L L IA B IL IT IE S ..............................................................................................
CAPITAL ACCOUNTS
Capital S to c k ..............................................................................................................
Surplus .....................................................................................................................
Undivided Profits .....................................................................................................
Capital Portion of Loan Loss and Securities R e s e rve s ...........................................
TO TA L CAPITAL A C C O U N T S ..............................................................................
TO TA L ..................................................................................................................
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
$ 1,012,747,938.16
103,740,000.00
72,505.82
1,345,172.50
3,001,647.94
11,986,090.54
............2,100,027.20
$ 1,134,993,382.16
2,800,000.00
47,200,000.00
51,139,885.59
3,137,122.24
$ 104,277,007.83
$ 1,239,270,389.99
dents flocking in to shop, eat and ob
serve what the town once had looked
like. Today, it is a thriving community.
Four SCMA members flew to Albia
to see what had been accomplished
and were convinced that restoration of
Harrisonville’s buildings was the route
to take. Modernization, it was felt,
would mean direct competition with
the giant shopping centers nearby, and
Harrisonville’s little shops, averaging
1,500 square feet of space each,
couldn’t compete. Restoration also
would mean a distinct identity and,
coupled with merchants’ friendliness
and personal acquaintances with many
customers, would tend to bring shop
pers back, the SCMA reasoned.
Allen Bank let it be known that it
would support financing for the pro
gram, but no one stepped forward im
mediately. “No one wanted to be stuck
making the investment in restoration
only to find that few others in the
square were interested,” said Mr. Lind
sey.
But in early 1974, one store’s owner
signed a commitment. A few others
soon followed suit.
A Des Moines, la., restoration ex
pert, who had done much of the work
in Albia, was called in and, by mid1974, the restoration had begun to cap
ture notice. Merchants on all sides of
Harrisonville’s square began asking
how they could get started. One build
ing owner who lived out-of-state re
portedly went to Harrisonville, saw
what her tenant-merchant had done to
restore the front of the building and
agreed to pay for restoration of the
sides and back of the structure.
By year-end 1975, 16 buildings on
the square had restored exteriors. Costs
had ranged from $1,000-$ 10,000.
As expected, exterior improvements
underscored the drabness of many
stores’ interiors, so merchants began
the job of modernizing: repainting in
brighter colors, repapering, putting in
new display cabinets and other fixtures
and installing better lighting. Some
stores retained elements of the com
munity’s past, using old covered-wagon
wheels for decoration, or a plow on
which to hang merchandise. One
boutique fashioned dressing-room cubi
cles from old barn siding.
Meanwhile, efforts were being made
to get the courthouse restored, since
it is the square’s most conspicuous
structure. Built in 1897 and a classic
example of public-works architecture
of the period, the imposing building
was dilapidated and grimy with age.
Finally, $42,000 was appropriated
and used to paint, seal, sandblast,
tuckpoint and rebuild portions of the
56
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
courthouse’s exterior.
By mid-1975, most of the building
restorations around the square either
were complete or ongoing and work on
the courthouse was nearing completion.
The change was so evident and appeal
ing that word spread and shoppers be
gan to flock to Harrisonville in great
numbers, a spokesman said.
“They first came because we were
different, unlike the giant, gleaming
shopping centers,” explained one of the
project’s leaders, “but they’ve returned
time and again because they like the
slower pace, the friendlier atmosphere.
Merchants like doing business here but
also like to sit and Tap’ a spell.”
Uptown Harrisonville’s “Square Cen
ter”—as it’s called—improvement has
led to other developments:
• The new municipal government
works more closely with various com
munity groups to improve Harrison
ville. One of the first things it did was
to hire a city administrator to run mu
nicipal services more efficiently.
• The city furnished time and labor
at reduced cost to help build a section
of street for the loading and unloading
of school buses. Responding to a sec
ond request from the local school
board, Harrisonville now is working on
plans to eliminate the need for young
sters to cross a busy highway. Local
citizens are participating by donating
labor and funds.
• Operating its own utilities system
(electrical, water and sewage), the city
has encouraged private housing con
struction in the area by offering to sup
ply electricity for heating. Earlier, the
local gas company had brought hous
ing construction to a standstill by re
fusing to provide new hookups.
© An FM radio station offering
news, interviews, music, weather re
ports and considerable local-interest
programing began broadcasting in
1974, its owner convinced that the
community would offer strong growth
opportunity.
© Residents in and around Harri
sonville, responding to a radio telethon,
contributed $9,600 last year to enable
the community to obtain a $450,000
FHA loan. Its purpose? Construction
of 36 housing units for senior citizens.
The community’s share originally had
been set at $6,000.
• A “Log Cabin Festival” was held,
featuring local arts and crafts and call
ing attention to the restoration work.
It attracted more than 10,000 persons
over three days. The festival will be an
annual event, officials say.
• Plans are underway to build a
4,000-foot runway for use by small air
craft.
Those and other developments,
along with the restoration of the
square, have created new interest and
excitement in Harrisonville, and, say
community spokesmen, the outlook is
for better things ahead. * *
Central Missouri Bank
Active in Developm ent
The industrial development depart
ment of Central Trust, Jefferson City,
Mo., has been active in bringing new
firms to Missouri’s capital city.
Thomas J. Brown, vice president for
business development, reported that,
within the past year, the bank has se
cured a firm that makes industrial
pumps that will result in 500 new jobs.
A year-long construction project has re
sulted in local purchases that have
stimulated the local construction in
dustry. The project involves $7 million.
Mr. Brown also assisted in securing
a five-acre site for a firm constructing
truck body assemblies that employs
10 people.
Central Trust is working now with
a firm that will employ 25 people at a
plant to be opened soon in an adjacent
community. In addition, two 60,000square-foot distribution centers are be
ing built in the area for firms being
brought to Missouri by Central Trust.
O ppenheim er Slated as Speaker
At Banks' 20th 'M a rk e t D ay'
ST. JOSEPH, MO.— Brig. Gen. Har
old L. Oppenheimer, chairman, Oppen
heimer Industries, Inc., Kansas City,
has been slated as the featured speaker
during the 20th annual Market Day
September 8, sponsored by First Na
tional and First Stock Yards Bank.
The activities of Market Day will be
gin with registration at 9 a.m. in the
lobby of First Stock Yards Bank. Fol
lowing will be a tour of the Blueside
Co.
After the tour, a luncheon will be
served at the Feeder Pig Auction Cen
ter, during which a report of the cur
rent day’s market will be given.
The afternoon session will start at
2 o’clock at the St. Joseph Country
Club, where General Oppenheimer will
discuss “Update— Overseas
Agricul
tural Investment Inflow.” Following his
talk will be a panel discussion of pres
ent and future trends in livestock and
grain marketing.
The event will draw to a close with
a social hour beginning at 4 :3 0 and a
steak dinner at 6 o’clock.
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Banks Participate in Alternate Forms of Business-Development Financing
ANKS seeking financing assistance
for their customers can get it, not
only from correspondents, but from
business development corporations and
commercial lending firms. Following are
instances of the type of cooperation
available
from
non-correspondent
sources.
A firm in Oklahoma that manufac
tured manhole covers and drainage
grates for the construction industry was
faced with being closed by regulatory
agencies because its foundry was emit
ting noxious gases and could not meet
the clean air standards as required by
the health department.
In order to bring the plant into com
pliance, $538,000 was needed. Since
the firm could not find a lender for the
entire amount, the Oklahoma Business
Development Corp. (O B D C ), Okla
homa City, was contacted. OBDC was
able to assist the company in obtaining
almost $400,000 from a local bank,
with the Small Business Administration
(SBA) participating as a guarantor.
The majority of the balance was ob
tained from the Oklahoma Industrial
Finance Authority, a state lending
B
BUSINESS FINANCING
F IR S T M ISSOU RI LOAN PO O L
Loan Participations
Working Capital
Equipment
Construction
Acquisitions
Sale Leaseback
Financial Counseling
Packaging
$25,000 to $500,000
5 to 15 years
J E R R Y S T E G A L L , E.V.P.
"V/A/ANtt^
58
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
302 Adams St.
P.0. Box 252
Jefferson City,
Mo. 65101
314-635-0138
agency which was willing to take a the losses, the projections and satisfied
second mortgage. OBDC provided the itself of the feasibility of the situation.
balance of the financing and took as
Although the banks had been pre
collateral to its loan the personal as viously unsecured, they had the right
sets of the foundry’s principals.
to call for collateral at any time. ACC
According to Stanley B. Funderburg,
then made the loan, secured by ac
OBDC executive vice president, the counts receivable, inventory and fixed
important role that OBDC played in assets. The loan went to pay the exist
this case was one of packager. OBDC
ing bank loans and the banks in turn
worked closely with the two govern came back in on a 50% participation.
ment agencies as well as the industrial This solved the problem with the bank
foundation in the plant’s area.
examiner as the loans were brought
As a result of cooperation by these
down by 50% and were now secured,
organizations and other groups of with a specialist handling the collateral.
people, Mr. Funderburg said, it was
The banks now expect to stay in
possible to save 60 jobs and an annual volved with the credit and watch the
payroll of half a million dollars for the expected turnaround. At such time as
small Oklahoma community in which the company is completely turned
the plant was located.
around and recoups a substantial por
A company located in Iowa had ex tion of its losses, the banks will fund
perienced tremendous expansion in re the entire loan.
cent years. In 1973, the firm had sales
A revenue bond issue of $1,125,000
of $18 million and by 1975 sales had was passed by an Arkansas city recent
shot up to $67 million. Net worth had ly, the purpose being to construct a
risen from $250,000 to $5.5 million.
building to house a manufacturing con
The firm, which is in the agricultural cern that was expanding its operations
industry, has seasonable build-ups of in Arkansas, with headquarters main
inventory and accounts receivable as tained in another state.
well as seasonal demands to meet its
According to George H. Eagen, vice
trade obligations. The needs of the
president, First Arkansas Development
company in 1976 were anticipated to Finance Corp. (F A D F C ), Little Bock,
require a $20 million extension of
the bonds were issued in two series,
credit, which was substantially more
one guaranteed by a state agency, the
than the previous year. The local bank
other not guaranteed. FADFC pur
that has been involved in the financing
chased the second series with participa
of this firm throughout the years and tion by a local bank, with the bank be
that acted as agent with other banks,
ing allowed to take the earlier matur
called in Associates Commercial Corp. ities.
(A CC ), Chicago, for assistance.
The arrangements made by FADFC
A $20 million line of credit secured
enabled the firm to complete its expan
by accounts receivable and inventory
sion, create new jobs in the community
was arranged with the bank participat
and benefit the state’s economy.
ing for about half of the sum. ACC
Among the projects arranged by
handled the loan and the collateral con
First Missouri Development Finance
trol which entailed daily maintenance
Corp. (F M D F C ), Jefferson City, was
of the accounts receivable, 90-day au
one involving a producer of countrydits, weekly movement of inventory,
cured and fresh meats. FM D FC first
etc.
advanced the firm $100,000 for expan
The bank was kept advised by ACC
sion and later it participated with the
of all transactions and the bank, in
SMA in advancing funds to construct
turn, kept ACC advised of any develop
a new retail office and processing fa
ments.
cility.
A firm in the fabric industry incurred
According to Jerry Stegall, executive
monumental losses during 1974 and
1975 due to some ill-conceived expan vice president at FM D FC, the agency
sion plans. At the time, the firm had a will probably be requested to assist the
line of credit with two banks that firm with a working capital line now
totalled about $11 million. By the end provided by a Kansas City bank.
The firm sells its product nationally,
of 1975, the banks had caused the firm
to perform the necessary surgery and bringing increased business to Missouri.
FM D FC ’s participation has enabled
it was anticipated that during 1976, the
company would return to profitability. local banks to concentrate on short
The banks, however, had another term lending, with FM D FC and SMA
problem; the examiners were skeptical handling the long-term loans.
The Business Development Corp. of
and wanted the loans classified. ACC
Kentucky (B D C K ), Louisville, has
was called in, examined the collateral,
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Federal Reserve Bank of St. Louis
/
Tulsa, Oklahoma 74192
59
participated with banks in financing
projects in various areas.
A firm in a small town with under
3,000 population needed $200,000
working capital, according to J. C.
Dixon Jr., BDCK executive vice presi
dent.
There was a $250,000 debt on the
company real estate in which the SBA
was involved. Due to its interest rate
structure, BDCK could not participate
with the SBA. The property was ap
praised in excess of $600,000, so BDCK
retired the existing mortgage and
loaned the company $450,000, secured
by a first mortgage on the real estate.
In a
larger community, a project
costing
$1.5 million was handled
throughparticipations
by a bank,
which took a first mortgage of almost
$800,000, and BDCK and the Ken
tucky Industrial Development Finance
Authority, which took co-second mort
gages of $300,000 each. The balance
was taken care of with company equity.
Development
Bank, SBA Team Up to Provide Loans,
(Continued from p age 23)
Helping Area s Small Businesses Grow
T LEAST TWO small businesses
in Fort Worth are thriving today,
thanks to loans by Fort Worth National
and the U. S. Small Business Adminis
tration (SBA ).
Leon Bargas, an experienced ma
chinist, had been operating a machineshop business—which began as a hob
by—from his garage for seven years.
About a year ago, deciding to expand
into a full-time shop, Mr. Bargas began
his search for financing.
The American GI Forum’s Local
Business Development Organization
(LBD O ) assisted the entrepreneur in
putting a presentation package togeth
er for the SBA, which agreed to finance
the mortgage for a new building on
land already owned by Mr. Bargas.
In getting interim financing, he was
turned down by the institution where
he had done most of his banking. But
N. David Moore, assistant vice presi
dent in the real estate loan department
of Fort Worth National, agreed to in
terim financing.
Currently,
Bargas
Manufacturing
Co., which includes Mr. Bargas and
two other machinists, are producing
shafts for turbines used in building
roof fans. Said Mr. Bargas, “Right now
we are so overloaded with this project
we can’t do anything else, since the
shop is geared to produce 12,000 shafts
weekly.”
For Billy G. Winston, owner of Billy
Gee’s Air Conditioning Co., it was a
hard-fought four years before his firm
was profitable.
In 1970, he opened for business in
“The Bottom,” a low-income, predomi
nantly black neighborhood near down
town Fort Worth. A retired Air Force
sergeant, Mr. Winston obtained a $12,000 SBA loan, but building costs of
$11,500 left him little working capital.
Air Force retirement pay helped Mr.
Winston meet living expenses.
“That was the worst of our first
year,” Mr. Winston recalled. “The best
of that year was when I met T. J.
A
60
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Federal Reserve Bank of St. Louis
Leon B a rg as (I.) d e m o n s tra te s e q u ip m e n t in
his n e w m a ch in e shop, w h ic h w a s fin a n ced by
Ft. W o rth N a t'l a n d
lo an s. Looking on a r e
S m all
D a v id
Business A d m in ,
M o o re (c.), b a n k
a .v .p ., a n d W o o d y W o o d s (r.), city co u n cilm an .
Vance.” Mr. Vance is vice president,
Fort Worth National’s commercial loan
department.
“It was a 24-hour-a-day fight to keep
our doors open,” Mr. Winston contin
ued, “but short-term money and good
advice from the bank really helped.
Mr. Vance has counseled me through
out and Fort Worth National handles
my payroll.”
Billy Gee’s Air Conditioning Co.
presently employs nine people and fin
ished its fourth year with a profit of
$4,000 after losing $5,000 each of its
first three years.
Mr. Winston also has initiated a sav
ings plan at Fort Worth National for
his employees. “It may be hard to
realize,” Mr. Winston said, “but the
people I employ have been borrowing
money all their lives just to exist. Now
they are saving some money.” * *
• Nortrust Corp., parent HC of
Northern Trust, both of Chicago, has
applied to the Comptroller of the Cur
rency for permission to establish Se
curity Trust Co. of Sarasota, Fla., a na
tionally
chartered
trust company.
Security Trust will be a Nortrust sub
sidiary and is expected to be in opera
tion by year’s end.
lars of federal grant money budgeted
for local government use are left un
touched. More local governments don’t
make use of the grant funds “because
the federal aid system is a complicated
conglomeration of politics, economics,
research and hard work tied together
by a massive bureaucratic network.”
The assistance service of CAP in
cludes a computerized grants search
procedure that matches current grants
guidelines with individual community
needs, a continual reporting program
to keep administrators abreast of
changes in grant legislation and a
Washington-based governmental com
munications effort.
• Continental Illinois National, Chi
cago, offers area development/consult
ing services to its correspondents, usu
ally at no charge. The service was or
ganized 12 years ago and is headed by
Charles Willson, vice president.
Since local banks are often the prime
movers in community development,
Mr. Willson said, banks frequently con
tact Continental for assistance.
Mr. Willson said that Continental is
involved in working with correspon
dents that are seeking to foster commu
nity growth and development by at
tracting new industry. Staff members
are sharply aware of their responsibili
ty to the bank, the community and the
company interested in a “marriage”
with the community to assure all par
ties involved that any arrangement will
be mutually beneficial, he said.
After parties are brought together,
there is often the problem of financ
ing construction projects. Continental’s
area development people offer counsel
on the best way to finance a project,
including the use of industrial revenue
bonds. Continental often participates
with correspondents in purchasing local
municipal issues.
Recently, one of Continental’s corre
spondents received a request from a
customer to provide interim financing
on a low-cost housing project to be fi
nanced ultimately by the Farmers
Home Administration (FHA). Since
MID* 9NTINENT BANKER for August, 1976
Ittakesmorethanpetroleum
tofueltheworld’senergycapital.
physical and human resources, a central
national location, convenient port facilities and the availability of technical and
Houston and the Texas Gulf Coast’s scientific personnel and services.
Providing financial solutions in the
leadership in the petroleum industry goes
undisputed. And though it all began back energy field is a major part of First City
in 1901 with the discovery of the famous National Bank. What we’ve learned is
Spindletop Oil Field near Beaumont, it yours.
has taken more than just oil to build the
We’re becoming involved with more
energy capital of the world.
and more industries every day. And we’re
Gulf Coast energy dominance is the proving to correspondents that more serproduct of a successful formula — a
strong economic base, the right mixture of
Helping on m any levels is First City
National Bank.
MID-CONTINENT BANKER for August, 1976
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Federal Reserve Bank of St. Louis
vice is the result of more experience,
Understanding business as well as banking has helped us become . . .
.
^ major financial strength behind
Texas industry.
FIRSI
CITY
NATIONAL
BANK
O F HOUSTON
61
Continental had not previously partici
pated in this type of interim financing,
Mr. Willson said, it developed back
ground on the FHA’s programs and
helped the correspondent evaluate the
risk of such a loan.
• Republic National, Dallas, main
tains a full-time area development de
partment to assist in the attraction and
orderly assimilation of profit-oriented
growth firms in cooperation with down
stream correspondents.
According to Robert B. Seal, vice
president in the industrial services divi
sion, one of the most important charges
to a major metropolitan bank is to keep
the business climate strong, both in the
nucleus trade area and throughout the
state.
“Republic’s industrial division is
called on to work with chamber of
commerce committees in smaller towns,
address banquets on the subject of in
dustrial development and provide di
rect leads on prospects considering the
area. This includes consultant services
and start-up programs, such as indus
trial foundations, and the structuring
of new business development or cham
ber of commerce-type activities. This
is in addition to the typical correspon
dent bank department services.”
Industry locates where the “bottom
line” results produce an optimum profit
condition, Mr. Seal said. “While we all
rejoice when a new firm locates on
Main Street, Dallas, there is reason for
celebration when a manufacturing fa
cility locates a hundred miles away.
Such was the case when a large air
craft supply firm located in one of our
correspondent’s cities. The resultant
payroll not only stimulated the commu
nity’s economy, but strengthened a
long-standing correspondent friend
ship.”
• United Bank, Denver, states that
its area development activities put the
bank “in the business of helping our
correspondent communities grow in
size and vitality, rather than in the
business of pirating companies away
from other regions.”
According to Robert H. Dressel, vice
president, correspondent banking, spe
cialists in United Bank’s economic de
velopment department draw on the re
sources of United and its 18 affiliates
throughout Colorado to keep current
economic data available.
The bank publishes detailed profiles
of 20 Colorado communities each year
and a monthly economic development
newsletter is published that offers up
dating of trends in the state’s economy.
“Colorado confidential” is the title of
a packet of information available to
correspondents that includes fact sheets
62
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Federal Reserve Bank of St. Louis
on site and building referral services,
economic information, special studies,
a briefing center and labor relations.
Mr. Dressel said the bank’s annual
economic overview has been widely
used by chambers of commerce in Col
orado communities to attract new busi
ness. Officials in Lamar, Colo., for ex
ample, feel the bank’s service played
a part in bringing in a major retail
chain. They have also used the service
in a search of additional medical spe
cialists and to support applications for
funding a new hospital.
• Deposit Guaranty National, Jackson, Miss., thinks of its industrial de
velopment department as a catalyst to
growth, according to H. A. (Beau)
Whittington Jr., director of the depart
ment.
The goal of the department is to de
velop more and better jobs for Mississippians. To do this, the department
works closely with correspondents, of
fering services from site recommenda
tion to locating new and expanded
markets. This includes site data, trans
portation and economic studies, labor
force statistics, training programs, con
struction, equipment and inventory fi
nancing, travel service and expansion
programs, Mr. Whittington said.
• Commerce Bank, Kansas City, has
an industrial development department
that contacts corporations throughout
the U. S. and foreign countries to de
velop potential customers for the estab
lishment of plant sites in both Kansas
City and out-state communities, ac
cording to Fred N. Coulson Jr., senior
vice president.
The bank is active in participating
in overline requests with correspon
dents to provide construction financing
and permanent loans.
One of the services Commerce of
fers correspondents in developing new
business is a series of industrial site in
formation sheets and profiles that zero
in on specific Missouri communities.
The first sheet is useful in determining
the needs of industries interested in lo
cating in Missouri; the second sheet is
useful in informing industries of the as
sets of Missouri communities. Com
merce Bank can serve as a clearing
house for this information, brokering
“marriages” that are beneficial to cor
respondents and local and state econo
mies.
• United American Bank, Knox
ville, offers to do the “legwork” for
firms interested in locating in eastern
Tennessee. It does this by providing
plant location questionnaires that en
able the bank to determine the needs
of a prospective industry. The needs
are matched with what is available in
eastern Tennessee communities, with
information provided by correspon
dents.
According to George Hunter, a new
realization of the industrial potential
of eastern Tennessee is emerging. The
area is considered to be the energy
capital of the U. S., due to the Atomic
Energy Commission installation at Oak
Ridge. An international energy exposi
tion is on the drawing boards for Knox
ville in 1982.
Mr. Hunter said the vigorous efforts
of United American on behalf of its
correspondents are expected to result in
substantial industrial growth for the
area.
• Merchants National, Mobile, has
used its industrial development depart
ment to broaden the relationships with
downstream correspondents and has
opened another avenue of service that
might be provided to result in stronger
ties and increased business activity, ac
cording to Sheldon L. Morgan, senior
vice president.
Through the department’s nation
wide advertising effort, a firm contact
ed Merchants, seeking a source for
natural gas in connection with an in
dustrial project. Merchants located the
source and introduced the firm to the
local bank, community officials and the
local industrial development agency. A
site was developed and Merchants
packaged the financing through an in
dustrial revenue bond issue. It brought
in several correspondent banks to de
velop a syndicate to purchase the
bonds.
The firm wanted to develop a sec
ondary operation involving the pre
conditioning of materials imported
from Japan. Merchants and one of its
correspondents worked together on a
project to construct a plant and arrange
for the international banking services
that were required. The operation re
sulted in 50 jobs in a town of 3,000.
• First American National, Nash
ville, has an industrial development de
partment that is active in helping solve
problems in the development area, ac
cording to William A. Blair, banking
officer.
Recently, representatives of the bank
received a call from a downstream cor
respondent requesting aid in the dispo
sition of a building and the property
on which the building stood. The cor
respondent had acquired the parcel as
a result of a foreclosure. Total liability
of the correspondent amounted to more
than $700,000.
The efforts of First American’s in
dustrial development department re
sulted in the locating of a financially
strong firm that was willing to purchase
the building for use as a manufactur-
MID-CONTINENT BANKER for August, 1976
“Look, I just got a divorce. The judge
gave the house to my wife and the
payments on the new kitchen to me.
no w ay
in the world
I can pay
back the
loan.”
https://fraser.stlouisfed.org
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mg facility. The firm wanted to expand
the building.
The purchase and expansion were
handled through an industrial revenue
bond issue totaling $4.3 million that
was handled by First American. The
bank was named paying agent and
trustee for the bond, which meant it
could charge a fee for servicing the
bond issue.
First American helped its correspon
dent by paying off the $700,000 note
and arranged for the operating and
payroll accounts of the firm to be
placed with the correspondent.
• Commerce Union, Nashville, has
assisted its correspondents for many
years in obtaining new accounts
through the marketing efforts of its cor
respondent and industrial development
departments, according to Charles M.
Ozier Jr., vice president.
Recently, Commerce Union com
bined the special services of its merger/
acquisition and industrial development
departments to direct new commercial
and persona] accounts to a correspon
dent located in a small middle Tennes
see community.
Commerce Union’s industrial devel
opment officer learned from one of the
state’s industrial representatives that a
firm in the Midwest was seeking an
available building in which to locate
a new metal working plant, preferably
in a community of less than 10,000
population.
The state’s industrial representative
indicated there was little time to sub
mit additional building recommenda
tions, as the firm’s plant location team
had given high priority to an available
facility in an adjoining state.
Commerce Union’s people compiled
a list of suitable buildings, selected
one that was suitable and compiled a
brochure and forwarded it to the com
pany for consideration. In addition,
data on the advantages of locating in
Tennessee and the specific community
in which the building was located were
submitted. After several weeks of ne
gotiations, in which both Commerce
Union and the local correspondent
bank participated, the firm announced
plans to purchase the building.
In addition to a profitable payroll
and general fund account, the corre
spondent obtained a majority of the
personal accounts of management and
staff of the new plant. The firm is now
considering a Tennessee location for
a second plant.
• Third National, Nashville, has
been active in working with correspon
dents in locating new industry in Ten
nessee.
64
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
One of its projects involved a Chi
cago automotive products manufacturer
that was looking for a site for its com
puter headquarters, employing more
than 200 people. Third National
helped locate a site in Nashville and
provided mortgage loans to about half
of the 65 families relocated from the
Chicago area.
The firm was so satisfied with its
new location that it enlisted the aid of
Third National to find additional sites
for plants. A site was located in the
western portion of Tennessee in coop
eration with a correspondent that re
sulted in a plant employing 800 peo
ple, with the correspondent getting the
plant payroll.
Third National helped a firm expand
its plant in another part of the state.
The firm now employs 1,300 people,
and its management payroll is with a
local correspondent.
Thomas B. Green, vice president and
director of Third National’s regional
development department, said his de
partment always makes sure borrowers
have the expertise to make a go of new
ventures. Thorough investigation of
prospective borrowers has resulted in
minimal losses in the industrial devel
opment sector, Mr. Green said.
• Manufacturers Hanover Trust,
New York, is active in financing the
construction of commercial real estate
through its real estate department and
affiliated mortgage financing arm, Citi
zens Mortgage Co.
The bank has participated with cor
respondent banks in financing shopping
centers, warehouses and office build
ings throughout the Mississippi Valley
and the Southwest. Among the larger
projects in which the bank has been in
volved are City Center Square, Kansas
City; North Riverside Park Shopping
Center, Cook Countv, 111.; and Kellogg
Mall, Wichita.
• Liberty National, Oklahoma City,
organized its industrial development
department in 1970. The department’s
program has evolved into three main
activities, according to Willis J. Wheat,
senior vice president.
Community development—At the
request of a correspondent, Liberty will
survey a community to point out the
strengths and deficiencies, provide
guidelines for correcting the deficien
cies and assist leaders in developing a
program to achieve economic develop
ment.
Industrial development— Liberty has
developed an inventory of prospective
plant sites throughout the state and
has made more than 500 presentations
over the past five years to prospective
new industries. Many of the prospects
are now located in Oklahoma.
Industrial finance—All sources of
available industrial finance are main
tained by Liberty and are available to
correspondents.
Liberty’s industrial development de
partment maintains direct contact with
facility planning personnel on a nation
wide basis, providing a link between
correspondents and various official and
semiofficial industrial and community
development groups, Mr. Wheat said.
Much of the department’s time is de
voted to redevelopment of central cities
in Oklahoma. It is engaged in planning
for and seeking redevelopment funds,
negotiating with redevelopers and ma
jor users of redevelopment projects.
• Bank of Oklahoma, Tulsa, assists
correspondents in the industrial devel
opment area, according to Charles A.
McNamara, assistant vice president.
He reported that a local correspon
dent came to the bank desirous of put
ting together a tax-free industrial au
thority loan in the amount of approxi
mately five times the correspondent’s
loan limit. Bank of Oklahoma was able
to assist the correspondent. * *
Funds-Switching Network
Begun by S&L Group
DAYTON, O.—Nine area S&Ls—
with about 185,000 customers—have
formed SLATE (Savings & Loan Au
tomated Teller Exchange) to imple
ment one of the nation’s first electronic
funds-switching networks.
The new service, which will begin
this September, will transfer financial
transactions in supermarkets to S&Ls
and will be called Cash Plus. S&L cus
tomers will be issued Cash Plus cards
and will be able to make withdrawals,
loan payments or have checks guaran
teed.
NCR 279 financial terminals will be
operated by supermarket personnel and
will be linked with an NCR Century
computer at a data center here. It will
identify the S&L involved in a trans
action and switch the data to one of
three computer processing bureaus.
SLATE plans to extend the service to
the Columbus and Cincinnati areas by
1977.
The Cash Plus program originated
in Milwaukee, where it presently is
used by customers of more than 20
S&Ls in about 30 supermarkets and re
tail locations. The Dayton program,
however, will use more than one com
puter, whereas the Milwaukee system
utilizes only one; hence, the need for
a switching computer in Ohio,
MID-CONTINENT BANKER for August, 1976
WE'RE HELPING TO BUILD-UP THIS
PART OF OUR GREAT LAND,
WE'RE WITH YOU.
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MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
65
Disposition of Credit Life Insurance Income
Proposed by Comptroller in New Regulation
PROPOSED REGULATION gov
erning disposition of income
from the sale by national banks of
credit life, health and accident insur
ance was sent July 19 to the Federal
Register by James E. Smith, outgoing
Comptroller of the Currency.
The new regulation, designated 12
C.F.R. 2, sets forth several ways of
selling credit life insurance. A national
bank may choose any one of the meth
ods listed, but may not distribute the
resulting income to its officers, directors,
principal shareholders or their interests.
The regulation declares that distribu
tion of credit life insurance income to
parties other than the bank or its oper
ating subsidiary is an unsafe and un
sound banking practice. The only ex
ception to this rule pertains to arrange
ments where the bank and the entity
to which the insurance income is trans
ferred have common shareholders. For
example, a bank wholly owned by a
holding company would be permitted
to transfer credit life insurance income
to an insurance agency affiliate, provid
ed the affiliate also is wholly owned by
the HC. Similarly, a bank could trans
fer the income to a trust for all stock
holders.
In releasing the regulation for com
ment, Mr. Smith expresses concern
about the large sums derived from the
sale of credit life insurance now being
diverted to individuals or entities other
than the bank. He refers to the numer
ous lawsuits now pending against
boards of directors of S&Ls alleging a
diversion of insurance income and
notes that in all cases decided to date,
the directors had been held personally
liable. The Comptroller also points out
that regardless of the outcome of a
particular lawsuit, the publicity it gen
erates would not reflect favorably on
the bank or its management.
The Comptroller has held the view
for many years that national banks may
sell credit life, health and accident in
surance either by having the bank or
one of its employees act as agent or by
securing a group policy yielding ex
perience refunds on the basis of the
underwriter’s loss experience. For ex
ample, in the 1960 edition of the
Comptroller’s Digest o f Opinions, the
Comptroller said that in No. 9420, na
tional banks “wherever located” may
A
66
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
provide individual or group credit life
coverage and charge their loan cus
tomers accordingly. Additionally, the
Comptroller’s Office has stated that
since credit life insurance now is widely
used by lenders as a form of security
in lieu of requiring guarantors or co
makers on the note, acting as agent
for its sale is within that certain power
granted national banks in 12 U.S.C.
2 4 (7 ) “to exercise . . . all such inci
dental powers as shall be necessary to
carry on the business of banking . . .
by loaning m oney on personal security.”
(Emphasis added.) The Comptroller’s
conclusion in this regard also was in
fluenced by the widespread availability
of credit life and A&H insurance at
commercial banks throughout the U. S.
and by the fact that credit life insur
ance generally isn’t obtainable else
where.
Several methods of selling credit life
insurance are used in the commercial
banking industry, the Comptroller
points out. Under one procedure, the
bank or its employee obtains an insur
ance agent’s license, which permits the
sale of individual policies of credit life
insurance. Under the proposed regula
tion, all commissions derived from this
arrangement must be turned over to
the bank and credited to the bank’s in
come account for the benefit of all
stockholders. If the commissions are
received initially by the employee hold
ing the agent’s license, they must be
transferred to the bank directly or pur
suant to a contract between the em
ployee and the bank by which the em
ployee agrees to reimburse the bank to
the extent of his commissions for use
Comments Solicited
Comments on the Comptroller’s
proposed regulation on the sale of
credit life and accident and health
insurance (described in the accom
panying article) are requested with
in 60 days of publication July 19 of
the proposal in the Federal Register.
These comments should be ad
dressed to: C. Westbrook Murphy,
Deputy Comptroller for Law and
Chief Counsel, Comptroller of the
Currency, Washington, DC 20219.
of bank premises, employees and good
will.
Another arrangement described by
the Comptroller calls for the bank to
secure a group policy. Under this
method, loan customers are sold certifi
cates of participation in a group credit
life insurance policy, and the under
writer periodically remits to the policy
holder (the bank) a dividend (some
times called an experience refund or
retrospective rate credit) based on the
underwriter’s loss experience. This pro
cedure has been approved by the
Comptroller for many years for all na
tional banks and is widely used in the
banking industry for the sale of credit
life and A&H insurance.
Under still other arrangements, a na
tional bank can sell credit life insurance
at no profit pursuant to an arrange
ment with the underwriter calling for
the bank to be reimbursed for its ad
ministrative expenses in collecting and
disbursing the premiums, furnishing the
underwriter a monthly statement, etc.
Alternatively, a national bank may pro
vide group credit life insurance cover
age at its own expense. Finally, a na
tional bank may refund to its borrowers
any commissions or experience refunds
it receives.
The bank’s directors are solely re
sponsible for the choice of the arrange
ment by which credit life insurance is
sold, the Comptroller emphasizes. His
proposed regulation expresses his fur
ther opinion that under no circum
stances may the board select a method
of selling this insurance that confers a
personal benefit on an officer, director
or principal stockholder.
Unsafe ancl Unsound Practices. For
several reasons, the Comptroller be
lieves that any arrangement allowing
parties or entities other than the bank
to receive and retain income earned
from the sale of insurance in connection
with bank loans is an unsafe and un
sound banking practice.
First, he says, analysis of the pur
poses of 12 U.S.C. 73 and 12 U.S.C.
93, as well as common law fiduciary
principles suggest that directors may
be held personally liable for allowing
insurance income to be retained by
parties other than the bank. Histori
cally, according to the Comptroller, the
MID-CONTINENT BANKER for August, 1976
HARRIS
BANK.
DIRECTORS
C onsolidated S ta te m e n t of C ondition
ASSETS
June 30, 1976
Cash and Due from Banks...............................................
Time Deposits in Other Banks.........................................
Federal Funds Sold and Securities Purchased
under Agreement to Resell.........................................
Investment Securities:
U.S. Treasury Securities...............................................
State and Municipal Securities...................................
Other Securities............................................................
Trading Account Securities..............................................
Loans, net of Unearned Discount...................................
Less: Reserve for Possible Loan Losses.........................
Direct Lease Financing....................................................
Customers Acceptance Liability......................................
Bank Premises and Equipment........................................
Other Assets......................................................................
Total Assets.......................................................................
$ 722,988,521
427,250,043
181,050,000
591,008,034
419,218,032
6,358,310
175,235,849
1,625,777,077
(26,211,991)
55,260,235
54,424,090
89,559,048
74,81 9,063
$4,396,736,311
LIABILITIES
Demand Deposits..............................................................
Savings Deposits and Certificates...................................
Other Time Deposits.........................................................
Deposits in Foreign Offices.............................................
Total Deposits...............................................................
Federal Funds Purchased and
Other Short Term Borrowings.....................................
Acceptances Outstanding................................................
Accrued Interest, Taxes and Other Expenses.................
Mortgage Payable.............................................................
Other Liabilities.................................................................
Total L ia bilities................................................................
$1,232,110,575
715,712,848
748,178,049
452,297,265
$3,148,298,737
803,088,153
54,424,090
52,982,685
3,428,271
56,547,876
$4,118,769,812
EQUITY CAPITAL
Capital Stock ($16 Par Value) Authorized and
Outstanding 3,1 37,81 5 shares.....................................
Surplus...............................................................................
Surplus Arising from Assumption of Convertible
Capital Notes by ParentCompany...............................
Undivided Profits..............................................................
Equity Capital....................................................................
Total Liabilities andEquity Capital..................................
$
50,205,040
91,302,760
16,677,100
11 9,781,599
$ 277,966,499
$4,396,736,311
W ILLIA M F. M U R R A Y
Chairman of the Board
S T A N LE Y G. H A R R IS , J R .
Vice Chairman of the Board
C H A L K L E Y J . H A M B LETO N
Vice Chairman of the Board
C H A R L E S M. B L IS S
President
BEN N ETT A R C H A M B A U LT
Chairman and President
Stewart-Warner Corporation
JO H N W . B A IR D
President
Baird & Warner, Inc.
JO S E P H A. B U R N H A M
President and Chief
Executive Officer
Marshall Field & Company
J A M E S W . BU TTO N
Senior Executive Vice President —
Merchandising, and Director
Sears, Roebuck and Co.
O. C. D A V IS
President
Peoples Gas Company
K EN T W . DUN CAN
Executive Vice President
S A M U E L S. G R E E L E Y
President and Chief
Executive Officer
Masonite Corporation
R O B ER T C. G U N N ESS
Retired Vice Chairman of the Board
Standard Oil Company (Indiana)
H U N TIN G TO N H A R R IS
Trustee
Estate of Norman W. Harris
DO N ALD P. K E L L Y
President and Chief
Operating Officer
Esmark, Inc.
JO S E P H B. LA N TER M A N
Chairman
AMSTED Industries Incorporated
A R T H U R C . N IE LS EN , J R .
Chairman of the Board
A. C. Nielsen Company
J A M E S E. OLSON
President and Chief
Executive Officer
Illinois Bell Telephone Company
G E O R G E A. R A N N EY
Vice Chairman
Inland Steel Company
T H E O D O R E H. R O B E R T S
Executive Vice President
D A N IEL C. S E A R L E
Chairman of Executive Committee
and Chief Executive Officer
G. D. Searle & Co.
M A YN A R D P. V E N E M A
Director and Past Chairman
of the Board
UOP, Inc.
H a r r is T r u s t and S a v i n g s B a n k
W h o lly o w n e d subsidiary o f H A R R IS B A N K C O R P , Inc.
MAIN BANKING PREMISES: 111 West Monroe Street, Chicago, Illinois 60690
OPERATIONS CENTER AND BANKING FACILITY: 311 West Monroe Street, Chicago, Illinois 60690
INVESTMENT DEPARTMENT REPRESENTATIVE OFFICES: New York; St. Louis; San Francisco
LONDON BRANCH: 48/54 Moorgate, London, EC2P 2DH, England
INTERNATIONAL OFFICES: Mexico City; Nassau; Sao Paulo; Singapore
H a r r i s B a n k In t e r n a t io n a l C o r p o r a t i o n : 345 Park Avenue, New York, N Y. 10022
H a r r i s c o r p L e a s in g , In c .: 111 West Monroe Street, Chicago, Illinois 60690
W h o lly o w n e d subsidiaries o f H A R R IS T R U S T A N D S A V IN G S B A N K
OR GA N IZE D AS N.W. HARRIS & CO.,1 8 8 2 * ME MB E R FEDERAL DEPOSIT INS U RA N C E CORPORATION, FEDERAL RESERVE SYSTEM
MID-CONTINENT BANKER for August, 197 6
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Federal Reserve Bank of St. Louis
67
courts have never tolerated practices
that allow management or controlling
stockholders to profit personally from
corporate activities in a manner detri
mental to other shareholders’ interests.
The Comptroller believes the courts
will have even less sympathy when
such practices are carried on in a bank,
whose management and directors owe
not only the usual fiduciary duties to
the bank and all its shareholders, but
also a duty to depositors to conduct
the bank’s operations in a safe and
sound manner.
Mr. Smith says there are substantial
risks of suits against national bank di
rectors for diverting insurance income
to their own interests. He adds that at
last count, about 36 suits against S&L
directors were pending in Cook County
(Chicago) alone, and in the two liti
gated cases on record, directors were
held fully or partially liable. In the only
case involving a national bank, says the
Comptroller, the court found the di
rectors personallv liable for all credit
life insurance income diverted in the
preceding three years.
Second, says Mr. Smith, payment of
income earned on bank premises to
some shareholders constitutes an un
authorized preferential dividend. Such
payments may be made, he warns, only
after the income has been credited on
the bank’s books and included in the
fund from which dividends to all stock
holders are paid under provisions of
12 U.S.C. 60. Distribution of this in
come by any other means reduces the
sum available for dividends to all share
holders and accords an unwarranted
preference to a few, he adds.
1 bird, failure to credit insurance in
come on the bank’s books deprives the
bank of earnings and, therefore, makes
the bank less profitable.
Fourth, acquisition of a bank or a
chain of banks by investors who rely on
the credit life insurance income to ser
vice their bank stock loans is inherently
unsafe and unsound, according to the
Comptroller, because it decreases the
investor s concern for and interest in
running a profitable bank. If investors
are allowed to depend on an uninter
rupted flow of credit life insurance in
come transmitted in the form of some
thing other than a dividend, their in
centive to assure a profitable, dividend
paying operation is reduced. On the
other hand, says the Comptroller,
where investors must rely solely on
dividends other than on extraneous
sources of income to service their bank
stock loans, their interest in the bank’s
overall profitability is likely to in
crease.
Finally, arrangements that permit an
officer, director or controlling stock
holder to engage in business for his
own profit while using the premises,
68
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Federal Reserve Bank of St. Louis
personnel, good will and customers of
a national bank are inimical to the trust
and confidence placed by depositors in
financial institutions. Because banks
survive primarily on public trust, the
Comptroller points out, conduct that
may be permissible for similarly situ
ated persons in a nonbanking corpora
tion cannot be condoned in a bank.
The proposed regulation is intended
to reaffirm and clarify the Comptroller’s
long-standing policy against diversion
of credit life insurance income to par
ties other than the bank or its operating
subsidiary. The Comptroller believes
adoption of this regulation will con
solidate previous communications on
this subject, thereby providing bankers
and examiners with a convenient means
of reference to applicable principles.
Credit Scoring
(Continued from p age 10)
Credit lenders have developed their
techniques through a post-mortem pro
cedure. By taking one group of credits
—those that were paid on time—and
taking another group of credits— those
in which the lender had difficulty in
collecting— and then tabulating the
two, lenders are able to establish a pro
file of “desirable debtor” characteris
tics. By statistically weighing those
factors and using regression analysis
and other statistical procedures, analy
sis of the variants is possible.
So, it’s possible to divide into two
large categories those people that are
likely to pay and those that aren’t.
Through additional statistical proce
dure, one can adjust the risk of non
payment to the terms of the probable
cost of capital and the interest rate that
is in effect. A lender, extending the de
gree of risk he is willing to accept,
could make more loans, so at some
point, the maximum profitability of the
lender is achieved.
Perhaps that “point” is an over
simplification because it would vary
with the cost of capital. A lender
whose cost of capital is low can afford
to assume a higher risk in lending than
when capital costs are high. With a
lower cost of lending, it’s possible to
accept additional risk by adjusting the
interest cost to the risk indicated by the
credit-scoring technique.
A number of regulatory develop
ments affect credit extensions. No one
can fault the ideal of having truth-inlending or equal opportunity for credit.
Simple decency necessitates acceptance
of such socially desirable goals.
But my experience is that the people
these acts have been written to protect
are the ones who haven’t benefited
from them: They haven’t become more
informed of truth-in-lending or of equal
credit opportunities.
Studies indicate that more highly ed
ucated people are less informed on the
topic today than a decade ago. The
modest benefits that have resulted from
credit-oriented legislation have been at
a cost greatly overlooked by regulators,
legislators and society as a whole. The
president of the Philadelphia Fed has
noted that such regulations meant an
estimated expense to surveyed smalland medium-sized banks of from 1 -2 %
of net income in 1975. Those costs are
the equivalent of at least one additional
worker on the staff of a small bank, and
the in-house cost to banks of comply
ing with such regulations is estimated
to increase 1 0 - 2 0 %yearly.
There are other costs, including a
bank’s increased exposure to liability
suits. In credit scoring, there’s the dan
ger of having regulations which effec
tively defy the empirical statistical find
ings of the lenders.
I feel that, if a lender can statistical
ly prove there is a significant correla
tion between any of the items he
wishes to score, this shouldn’t prevent
him from using the advantages that
come with a good statistical procedure.
Yet, the government indiction of Regulation B precludes the use of certain
data which would improve statistical
measurements.
Other dangers should be considered.
As one’s judgment concerning a loan
is restricted to fewer considerations,
the less reliable— and more risky—will
be the lending arrangement. Similarly,
more and more lenders will insist on
more collateralization in extentions of
personal credit. The weight placed on
a loan application will, increasingly,
favor nondiscriminatory collateral.
More thought should be given by
regulators and lawmakers to such wellintended, but faulty, lending acts and
regulations! * *
A rea Bankers C hair BAI Councils
PARK RIDG E, IL L .—The Bank Ad
ministration Institute has announced
the appointments of V. Joseph Perez
III, treasurer, New Orleans Bancshares,
Inc., and Albert E. Radcliffe, president,
Bloomingdale (111.) State, as council
chairmen.
Mr. Perez chairs the Holding Com
pany Council, while Mr. Radcliffe di
rects BAI’s Community Bank Council.
They also serve on BAI’s 31-member
board, functioning as policy makers in
their respective areas of expertise.
The appointments, which became ef
fective fulv 1, will run through June
30, 1977.
MID-CONTINENT BANKER for Aiurust. 1976
450 REASONS W H Y
INTERNATIONAL RANKING ISN’T
FOREIGN TO COMMERCE.
For the 10th Federal Reserve District, the global
banking community begins in Kansas City, at Commerce.
With a network of 450 international correspon
dents, Commerce offers the largest and best equipped
International Department in the area.
This means that Commerce can perform any inter
national banking service you may need, right here from
the geographical heart of America.
Our full-time foreign exchange trading staff will
handle exchange of coins, currency, drafts, transfers and
foreign exchange travelers checks in any amount.
We can write letters of credit for your import cus
tomers, and handle documentation on export letters of
credit. Our foreign cash letter service can provide imme
diate credit on foreign items.
International Banking. It’s not foreign to us. Call
your correspondent banker or the International Depart
ment of Commerce Bank of Kansas City.
if! Commerce Bank
£\
wy r
of Kansas City
9th & Main
234-2000
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
10th & Walnut
N\
MEMBER FDIC
12th & Charlotte
69
Presenting
/ y * ine n a w n
Incorporation
(5 *IMSURAIUCE
be individuals or estates of individuals.
No shareholders can be nonresident
aliens, nor can there be more than one
class of stock outstanding. In addition,
all shareholders must consent to the
election, and the election applies only
if more than 80% of the corporation’s
gross receipts come from actual opera
tion of the business.
In those cases where there are share
holders involved in the corporation
who render no services, there may be
some advantage to distributing income
to all shareholders by use of this tech
nique since salaries could not be paid
to those shareholders who do not ren
der services to the corporation. Other
corporations may find it to their ad
vantage to forego the election as a SubChapter S corporation and continue to
be taxed as a regular corporation.
One problem sometimes encountered
by the family who elects to use the
corporate structure occurs after the
property has passed from the older
generation to the younger members. In
order to transfer as much of the estate
as possible during life by use of life
time gifts, many families transfer stock
to the children, grandchildren and oth
er chosen family members. While this
poses no immediate problems so long
as the operating members remain in
control, it may result in dispersal of
shares to a large number of people. Not
only may this result in management
problems, but it also can affect the
eligibility of the corporation to elect to
be taxed under provisions of Sub-Chap
ter S of the Internal Revenue Code.
Sub-C hapter C Corporations. Under
BANKERS!
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Please send me The Risk and Insurance Management
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Name........... .................................................................... ............
Title.........................................................................................
(Continued from page 26)
i
I
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provisions regulating taxation of a reg
ular corporation (“Sub-Chapter C”),
any income generated by the corpora
tion in excess of all allowable business
deductions is taxed to the corporation.
If distributions are made to sharehold
ers in the form of dividends, these
dividends again are subject to taxation
as income to individual shareholders.
This results in the so-called “double
taxation” and in some cases may in
crease tax liability for owners of the
business.
Paying out most of the earnings as
salaries may eliminate much or all of
this disadvantage. Since the salaries
qualify as a business deduction to the
corporation, shareholders who render
services to the corporation are eligible
to receive salaries taxed at the ordinary
individual tax rate, even if no taxable
income results at the corporate level.
All salaries, reasonable bonuses, inter
ests, rent and other business expenses
are deductible at the corporate level;
therefore, a large portion of the total
income of any farm corporation can be
paid out in expenses.
These provisions allow some splitting
of income between the individual and
the corporation at certain levels of farm
income. This is done by paying out
part of the corporate income as salaries
and retaining the balance in the cor
poration.
Other tax regulations provide that
some accumulations may be made of
earnings and profits without imposition
of tax. Prior to 1975, the amount of ac
cumulated earnings and profits was
limited to $ 1 0 0 , 0 0 0 for any corpora
tion. Under the 1975 Tax Reduction
Act, the exemption was raised to $150,000 for all years after 1974. Beyond
that level, the tax rate for accumulated
earnings is 2 7 to 38/2%. Naturally,
accumulations can be made if it can be
shown that they are justified by the
RM A H olds S e c u re d Le n d in g W o r k s h o p
i
I
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I
I
Institution...................................................................................
j
Street...........................................................................
I
1
City............................... State.......................Zip....................
!
A b o u t 70 b a n k le n d in g officers w e r e in a tte n d a n c e a t a recent secured le n d in g
w o rk s h o p
in St.
Louis, spo nsored b y R o bert M o rris A ssociates. The w o rk s h o p w a s th e last o f th re e held th ro u g h o u t
!________________________ ____________ !
70
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
th e cou ntry this y e a r. Photo a t r. show s fa c u lty , w ith
Lloyds B ank C a lifo rn ia , Los A n g e le s , s ta n d in g a t p o d iu m .
M o d e r a to r
P.
A n th o n y
Y a s ie llo ,
s .v.p .,
MID-CONTINENT BANKER for August. 1976
reasonable needs of the business. Ob
viously, if money retained in the cor
poration for business purposes later is
paid out to shareholders, it then will
be taxed to them as individuals either
in the form of salary or as a taxable
dividend.
The regular corporation reports its
own gains and losses. Long-term gains
are taxed at a maximum federal in
come tax rate of 30%. An operating loss
of a regular corporation cannot be used
by shareholders to offset ordinary in
come from other sources. In one sense,
operating losses become locked in un
der this form of tax structure.
At the time the corporation is orga
nized, shareholders may transfer assets
to the corporation in an exchange for
stock, usually without any federal in
come tax gain or loss to shareholders
or the corporation. The corporation
takes over the shareholders’ deprecia
tion schedule and tax basis. No gain
or loss is recognized on the exchange
if the transfer is solely in exchange for
stock or securities in the corporation
and if shareholders making the transfer
of property to the corporation in ex
change for stock or securities are in
control of the corporation, as a group,
immediately after the exchange. This
means that they must end up with at
least 80% of the voting power of all
classes of voting stock and at least 80%
of the total number of shares. If these
requirements are not met, gain or loss
may be computed and taxed to indi
viduals contributing the property to the
corporation. With a family owned cor
poration, this is usually no problem be
cause the people who make the trans
fer of property to the corporation will
be the same people who receive shares
of stock and control of the corporation.
Other Advantages. Since the farmer
usually becomes an employee of the
corporation once it is established as a
separate business entity, some changes
will occur involving the social security
tax. This may result in added annual
cost to the business and to the individ
ual owners because the rates for a selfemployed individual are slightly lower
than the combined rate that must be
paid by the employee and the employ
er-corporation.
This disadvantage may be more than
offset by some of the flexibility allowed
when an individual is reporting social
security as an employee rather than as
a self-employed individual. For exam
ple, since self-employment income of
ten fluctuates, there will be some years
in which a farmer’s income will be be
low the maximum covered amount.
When this happens, future retirement
benefits may be reduced. Since in
many farm corporations the employees
receive a fixed annual income as a
salary plus allowable bonuses, arrange
ments may be made whereby future so
cial security benefits can be assured.
In addition, use of the corporate
structure will allow an employee-owner
to continue to qualify for social securi
ty benefits while being paid a parttime salary from the corporation after
retirement. The corporate structure also
allows greater advantage to be taken
of fringe-benefit programs for employ
ees. In the small family farm corpora
tion, stockholders also are directors, of
ficers and employees. For this reason,
various types of employee-benefit plans
may be established that not only per
Conference on Business
Conditions in 1977
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
mit some retirement security for the
employee-owner, but also may offer tax
advantages. For example, retirement
plans are available which, if qualified
under Internal Revenue Service rules,
allow current payments to the plan to
be deductible by the corporation as a
business expense. Employees are taxed
on the income after retirement— at the
time the income is received. This type
of fringe benefit may be in the form of
a pension plan or in a profit-sharing
plan, but in either case tax benefits
may result to the employee-owner.
Other fringe benefits also are avail
able, such as tax-free medical benefits
and sick pay, group life insurance plans
FAIRMONT HOTEL
DALLAS, TEXAS
OCTOBER 18, 1976
Sponsored by
THE FOUNDATION OF THE SOUTHWESTERN
GRADUATE SCHOOL OF BANKING
• Essential information to prepare your bank’s budget for 1977.
• Impact of business conditions in 1977 on your bank’s asset
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• Topics will include: “Why Bank Management Should Be Inter
ested in the Business Conditions Outlook,” “The Business
Conditions Outlook in 1977,” “The Outlook for Bank Deposits
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1977: Implications for Your Bank’s Investment Portfolio,”
“Planning Your Bank’s Loan Portfolio in 1977: Expected De
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Dr. William S. Townsend, Administrative Director
THE SOUTHWESTERN GRADUATE
SCHOOL OF BANKING
SMU Box 1319
Dallas, Texas 75275
or call A/C 214/691-5398
71
or deferred compensation plans. The
1RS may allow the employer-corpora
tion to deduct insurance premiums as
ordinary and necessary business ex
penses assuming the payments are rea
sonable when considered in light of the
employee’s other compensation. Many
of these fringe-benefit plans are more
easily established under a regular cor
poration than the Sub-Chapter S cor
poration because of certain restrictions
in the Internal Revenue Code. In many
cases, fringe-benefit programs are more
advantageous if there are a number of
shareholder-employees. Some benefits
may not be available if there are only
one or two shareholders who are also
employees.
Corporation Financing. Some people
have the mistaken idea that operation
under the corporate structure will make
financing easier to obtain. Actually,
most lenders will evaluate the people
behind the corporation and their indi
vidual management ability, along with
prospects of repayment, regardless of
the structure involved. It is quite likely
that most lenders will require the indi
vidual shareholders, at least the ma
jority shareholders, to co-sign for the
debts of the corporation. Thus, the in
dividuals become responsible for the
debt should the corporation fail to gen
erate the necessary income to satisfy
the obligation. While one of the oftencited advantages of the corporate struc
ture is to provide limited liability for
individual shareholders, if the individ
ual shareholders co-sign or assume re
sponsibility for corporate obligations,
this advantage is lost.
Under the corporate structure, one
may find there are certain restrictions
placed on loans obtained through gov
ernment agencies. For example, the
Farmers Home Administration cannot
make loans, either operating loans or
real estate loans, to farm corporations.
Federal Land Bank and Production
Credit Association loans are available
to farmers who operate under the cor
porate structure if the corporation
meets certain requirements. It must be
a business in which: More than 50% of
its income originates from the produc
tion of agricultural products; more
than 50% of the value of its assets is re
lated to the production of agricultural
products or more than 50% of the value
or the number of shares is owned by
individuals who actually conduct the
farming or agricultural production op
eration. These restrictions should be
considered carefully in making a de
termination whether to operate under
a corporate structure.
Role o f the Corporation. In spite of
the occasional disadvantages of operat
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Are you over-insured or under-insured? In
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man. His experience and the knowledge
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him with the expertise to recommend the
specific insurance coverage your bank
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Scarborough & Com pany. 222 N. Dearborn St., Chicago, Illinois 60601
72
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Federal Reserve Bank of St. Louis
Phone(312)346-6060
ing the farm business as a corporation,
it does have its place in retirement and
estate planning.
But incorporation
alone is not the whole story. Incorpora
tion of the business must be accompa
nied by a detailed plan for the future
business operation. The real usefulness
of a family corporation is in combina
tion with other retirement and estate
planning techniques. To be used as an
effective estate-planning tool in combi
nation with gifts, a definite plan of giv
ing should be established and followed
faithfully. To do otherwise is to en
counter possible problems in the case
of unexpected death.
The corporate structure offers a real
advantage to those families who wish
to begin a series of gifts to their chil
dren while the children are still minors.
Under the Uniform Gifts to Minors
Act or similar legislation in effect in all
states, gifts of corporate stock and oth
er similar securities can be made by
transfer to minors. (The procedure
actually involves transfer to someone
acting on or in behalf of the minor
child until the child reaches majority.)
Transfers of other types of property are
not covered by this legislation and
problems could result from such trans
fers.
Because the corporate structure is
more formal, it may encourage some
families to operate in a more business
like and efficient manner. But the cor
poration should not be viewed as an
answer to financial problems of the
business. If the business has not been
able to generate enough income to sup
port the persons involved, incorpora
tion will not help. The corporation is
only a tool that can be used. Success
of its use depends on the individuals
involved. No amount of structural plan
ning can substitute for the personal
planning and personal commitments of
the family members involved in the
business. * *
Broadm oor, Pinehurst Hotels
Set as Assemblies Sites
At press time, registrations still were
being accepted for the 25th and 26th
Assemblies for Bank Directors, spon
sored by the Foundation of the South
western Graduate School of Banking,
Southern Methodist University, Dallas.
Sites for the Assemblies have been set
as The Broadmoor in Colorado Springs
and the Pinehurst Hotel and Country
Club, Pinehurst, N. C.
The 25th Assembly is set for Sep
tember 4-7, while the 26th is slated for
November 4-7. Director of the former
will be William H. Baughn, dean,
School of Business, University of Colo
rado-Boulder, while C. C. Hope Jr.,
MID-CONTINENT BANKER for August, 1976
Well handleyourcards
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We can deliver on that promise because
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to know we’ll treat those cards with the
expertise and strict security only a company
in the banking business can offer.
Your order will be custom-designed to fit
your needs.
We know the problems in a card issue, so
we begin by asking the right questions.
Once we have all the information,
we plan a program specifically
for you. A program which
reflects your needs and
those of your customers.
Our Automated
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Bureau will
handle the
entire
project.
From
issuing |g.
plastics, W L
designing W
and
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forms,
embossing
encoding, stuffing and mailing, through
housing of files, file maintenance, mass
issues and daily plastics production, ACS
can do it all for you. Our service bureau
concept can turn any card program into a
turnkey proposition.
Our cost estimates are specific.
Everything is itemized and all-inclusive.
You know in advance what you’re getting
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Our turn-around time is especially short.
And you always get a firm delivery
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requirements. We’re
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whether you plan a
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Whether you need a complete
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AMERICAN FLETCHER NATIONAL BANK A F N B
Indianapolis, Indiana
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
73
executive vice president, First Union men and faculty. For more informa
tion, write: Dr. Richard B. Johnson,
National of North Carolina, Charlotte,
President, Foundation of the South
will direct the latter.
A number of Mid-Continent-area western Graduate School of Banking,
bankers will be on hand as speakers SMU Box 1319, Dallas, TX 75275.
during the two events. Slated for the
25th Assembly are John H. Perkins,
president, Continental Illinois National,
Chicago; Frank A. Plummer, chairman,
M itchell N am ed RMA President;
First Alabama Bank, Montgomery;
Is Pres., O ld N a t'l, Evansville
Harold R. Hollister, senior vice presi
PHILADELPHIA— R o b e rt M o rris
dent, United Missouri Bank of Kansas
Associates has announced the election
City; James S. Hall, president, First
of Dan W. Mitch
Arkansas Bankstock Corp., Little Rock;
ell, president, Old
B. Finley Vinson, chairman, First Na
National,
Evans
tional, Little Rock; Gerald R. Sprong,
ville, Ind., as pres
president, American National, St. Jo
ident.
seph, Mo.; Will Mann Richardson, sen
Named associa
ior vice president and trust officer,
tion first vice pres
Citizens First National, Tyler, Tex.;
ident was Willis F.
and Eugene L. Swearingen, chairman,
Rich Jr., executive
Bank of Oklahoma, Tulsa.
v ice p r e s id e n t,
On hand for the Pinehurst Assembly Northwestern Na
will be William H. Bowen, president,
tional,
Minneap
Commercial National, Little Rock;
olis, while Edwin
Kenneth L. Roberts, president, First A. Sehoenborn, ex
American National, Nashville; and
ecutive vice president, Irving Trust,
Frank A. Plummer, chairman, First
New York City, has been selected as
Alabama Bank, Montgomery.
RMA second vice president.
Although 225-275 bank directors
They will take office on September 1.
and their spouses normally attend an
Mr. Mitchell, who has been associ
Assembly, the 25th and 26th will be
ated with RMA since 1956, entered
limited to 2 0 0 to ensure ample oppor banking at his institution in 1950. He
tunity for discussion among assembly- I advanced to president in 1973.
DESIGNERS AND CONSULTANTS TO FINA N CIAL IN S T IT U T IO N S
SPECIALISTS IN THE
PLANNING AND DESIGN OF
FINANCIAL BUILDINGS,
HAVING IN-DEPTH KNOWLEDGE
Consumerists W ant Benefits
O f Present System Continued
In EFT W orld/ Report Says
ATLANTA— Consumer groups want
future E F T systems to provide con
sumers with the same or comparable
benefits enjoyed presently: liability
limitations, stop-payment privileges,
proofs of payment and float.
Those were the findings of Payment
Systems Research Program, a subscrip
tion research program of Payment Sys
tems, Inc. (P S I), in its 200-page re
port, '‘Consumerism and E F T S .”
Written by William Adcock, the re
port is based on interviews with repre
sentatives of major consumer organiza
tions, a review of published material
and a survey of senior marketing offi
cers of the 1,006 largest financial ser
vice institutions in the U.S. Informa
tion also was supplied by the National
Public Interest Research Group (part
of Ralph Nader’s organization), the
Consumers Union and the Consumer
Federation of America.
Privacy is the main concern of con
sumer groups, the report shows. Such
groups fear that information gathered
by an E F T system would enable the
government to monitor movements of
citizens as well as their financial trans
actions. Recent court rulings opening
bank records to subpoena are the bases
for those fears, the study says.
Legislation is not seen by consumer
groups as offering a complete solution
to the problem of privacy invasion, the
x'eport indicates, because it is govern
ment intervention that is feared. “Con
sumerism and E F T S ” points out, how
ever, that future legislation on privacy
probably will occur after 1977. That
is when the Privacy Protection Study
Commission and the E F T Commission
will complete their studies.
Security of an E F T system is anoth
er major worry of consumer groups, the
PSI report shows. The groups are
skeptical about the willingness of fi
nancial service institutions to devote
resources to improve security.
Marketing officers interviewed in the
study revealed that they are aware of
the consumer movement and, in gen
eral, accept its validity. Marketing of
ficers may, however, underestimate the
seriousness of some consumer concerns
—privacy, in particular—the report
shows.
OF ALL PHASES OF SITE
PLANNING, INTERIOR DESIGN
AND INTERNAL OPERATIONS
11054 SO. M IC H IG A N AVE.
CHICAGO, ILL. 60628
PHONE: 312 568-1030
8111-B NO. U NIVERSITY
PEORIA, ILL. 61614
PHONE: 309 692-2625
74
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Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for August, 1976
THE BOATMEN'S TOWER
Boatmen's is moving unto bold new headquarters, reflecting their strength
and commitment to the future. That same strength and commitment
backs our correspondent bank team, a team wel -versed in today's
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THE BOATMEN'S
NATIONAL BANK
OF ST. LOUIS
314 / 421-5200
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Not Socialistic:
FDIC's Barnett and ABA s McPeters
Banks 'Feed' Customers
With Food-Coupon Offer
To Speak at Kentucky Convention
PAGE
DORTON
SULUENGER
L O U ISV IL L E —Robert E. Barnett,
who became FDIC chairman last
spring, will be one of the speakers at
the Kentucky Bankers Association’s an
nual convention at the Galt House here
September 12-14. Mr. Barnett succeed
ed Frank Wille after having served as
his deputy.
W. Liddon McPeters, ABA president
elect, and a Small Business Administra
tion official from Washington, D. C.,
also will be on the program. Mr. Mc
Peters is president, Security Bank, Cor
inth, Miss.
A program of remembrance is sched
uled for the morning of September 14,
and it will be conducted by the Rev
erend Dr. William Slider, pastor, Christ
United Methodist Church, Louisville.
The annual banquet will be held that
night.
Registration will be held Sunday
afternoon and Monday and Tuesday
mornings.
The association’s president-elect is
O. T. “Trigg” Dorton, president, Citi
zens National, Paintsville. He is a grad
uate of the Stonier Graduate School
of Banking, Rutgers University, New
Brunswick, N. J., and is a past presi
dent, Kentucky Chamber of Commerce.
His son, Dennis Dorton, is cashier of
Citizens National.
H. D. Sullenger, president, cashier,
and trust officer, Farmers Bank, Marion,
is the KBA’s treasurer. He entered
banking at this bank in 1946. He ad
vanced through several posts before
being named executive vice president,
cashier and trust officer in 1961 and
president in 1970. Mr. Sullenger was
elected a bank director in 1958. * •
KBA Officers. Leon Page, president,
Franklin Bank, is KBA president. He
joined his bank as cashier when it was
chartered in 1958 and became presi
dent in 1965. He is a past president of
KBA’s Group Four. Before going to the
bank, Mr. Page was on the research
staff of the Kentucky Department of
Revenue.
W H I T E SULPHUR SPRINGS,
W. VA.— Security Corp., Irvine, Calif.,
based marketer of banking equipment
and services, has announced its 7th An
nual Security Invitational Golf Tourna
ment.
The Old White course at The Green
brier has been slated as the site for
the tourney September 30 and October
1.
The event will precede the Ameri
can Bankers Association Washington,
D. C., convention by one day.
Invited guests for the Security tour
ney will vie for more than $15,000 in
prizes, which include a 1977 Cadillac
as the hole-in-one trophy. The tourna
ment’s grand prize is a two-week vaca
tion in Europe.
Besides the golf, a welcoming cock
tail party, an invitational breakfast, an
awards banquet and a women’s tennis
tournament and luncheon have been
planned.
mcpeters
76
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
barnett
Security Corp. G o lf Tourney
Slated fo r The G reenbrier
Two Green Bay, Wis., banks are
’feeding” their customers. No, the cus
tomers aren’t indigents; the banks are
offering coupons for food as premiums.
The banks, West Bank and East
Bank, which are affiliates, have begun
the promotion in conjunction with the
local Sure Way supermarket chain.
Each coupon is worth a 7% discount
from the first $25 in groceries at any of
the chain’s eight stores.
A customer opening an account for
$ 10 0
at either of the banks receives
four Foodsaver coupons. Anyone adding
to a savings account of 90-day maturity
or longer is entitled to three coupons
for $100-$250; four for $250-$500; five
for $500-$ 1,000; six for $l,000-$5,000;
and 12 for any deposit above $5,000.
The offer is advertised regularly;
local media are used.
How well has the promotion worked?
A spokesman for the banks says people
remember the Foodsaver program when
it appears in the newspaper and that it
has helped the banks’ image. What’s
more, the premium offer has been re
sponsible for more than 3,000 trans
actions in the first four months of its
operation!
Lack of Enabling Legislation
Causes B ankM ate Postponement
ST. LOUIS— Financial Communica
tion Services Corp. (FC S) has an
nounced a postponement of implemen
tation of the BankMate full-scale E F T
system. The FCS board voted not to
proceed with the full system because
the Missouri legislature in its 1976 ses
sion failed to pass enabling legislation.
The system is designed for banks in
a five-state midwestern area. Passage
of the needed legislation would have
enabled broad-scale E F T services from
remote locations.
An FCS spokesman predicted that
the necessary bill would be reintro
duced in the 1977 Missouri legislative
session, which begins next January.
The FCS spokesman pointed out
that the design for the BankMate sys
tem had been completed and that the
full system could be implemented as
soon as the legislation is approved. He
added that the firm is exploring al
ternative methods of providing the ser
vice under existing law.
FCS, a not-for-profit corporation,
was formed last year to introduce the
system of shared electronic facilities for
consumer banking in Missouri, Kansas,
Illinois, western Kentucky and Iowa.
MID-CONTINENT BANKER for August, 1976
rw n
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is a beautiful brochure.
They can pick from the exclusive peace Series, the
Seasons, the Life Series, tne Eartn Series; sixteen
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There are seven individualized standard safety paper
choices, end stub checks, desk book checks and business
checks in standard or custom design. Our wide variety of
c ljo rf J covers are also shown in full detail.
It is a complete marketing and advertising strategy that
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fcAiKRiiV'
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Hijfen® ¡ i l t j fctovided Dv CaBufi 8i*r»'i, T; ¡¡ss, Owanoma
77
Look Into the Future:
Continental Reorganizes Two Units,
Year-2000 Customers
Spotlighted in Bank Lobby
Forms New Multinational Group
ONTINENTAL BANK, Chicago,
has set a goal of positioning itself
among the country’s top three banks
for corporate customers within five
years. The bank is implementing this
plan by embarking on a major reorga
nization of its lending departments to
improve delivery of services to business
customers.
Chairman Roger E. Anderson, speak
ing to newsmen in Chicago at Conti
nental’s headquarters, said the bankwill form a new multinational banking
services department, which, along with
its commercial and international de
partments, will constitute a general
banking services group. It will be un
der the direction of Executive Vice
President George R. Baker.
Mr. Baker outlined the three func
tions that will make up the general
banking services group:
• C om m ercial banking service, head
ed by Executive Vice President Eu
gene Holland Jr., will service corporate
customers with headquarters in the
Lb S. with limited or no international
C
activities.
• International banking services,
headed by Executive Vice President
Alfred F. Miossi, will serve foreignbased customers with limited or no in
ternational activities.
• M ultinational banking services,
under Executive Vice President Ed
ward M. Cummings, will serve major
corporate customers who have exten
sive worldwide operations.
According to Mr. Baker, the new
multinational unit will involve estab
lishing a worldwide relationship pro
cess for customers, consisting of a
global account officer who will have
total credit and account responsibilities
for a customer and who will be sup
ported by a worldwide team of officers
and an information system that will be
coordinated to serve a customer’s total
needs.
The new management structure—
planned over the past year—will be
completed in about six months, with
initial implementation scheduled for
early 1977. • •
Visitors to Boatmen’s Bank of North
County, Florissant, Mo., probably were
quite surprised at the lobby display
that greeted them upon entering the
institution. Customers from the year
2 0 0 0 were on display.
The “future customers” are the chil
dren of present customers of the bank.
Boatmen’s mounted more than 60 indi
vidual color snapshots—which were
taken in the bank— of the pre-schoolers
on a large sign to greet those who come
in to do their banking business.
For Executives:
Financial-Counsel Venture
Is Begun by Bank, Firm
First National, Fort Worth, has en
tered into an agreement with Kanaly
Co., Houston, to provide personal fi
nancial counseling to executive and
professional people in the Dallas-Fort
Worth area.
Under the agreement, personal fi
nancial planning counsel is offered
through the bank’s trust and invest
ment services division by Kanaly Co.
The service involves an initial audit
of a client’s current financial affairs and
planning,
development of specific
short- and long-term recommendations
and assistance in carrying out those
recommendations. The program also in
cludes periodic reassessments of the
recommendations’ effectiveness.
Areas covered by the counseling are
income, investments, tax strategies in
surance and estate planning.
Trust M a n ag em en t Service
O ffered by Bank in Texas
HOUSTON—Cullen Center Bank
has announced Trust-Aid, reportedly
the first such reporting system of its
kind in the state. The system gives in
stantaneous reports on trust accounts
and is fully automated.
Trust-Aid calculates, posts, sum
marizes and analyzes on demand and
produces checks, account reviews,
statements and management reports re
lating to trust accounts. The entire
process is said to take moments to com
plete.
According to a Cullen Center
spokesman, the Trust-Aid system offers
total control of all department opera
tions. If, for instance, a customer un
expectedly wants an account review,
it would be available in “an instant,”
rather than in a few hours or days, as
with the previous, manual system.
78
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Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for August, 1976
For Retired M e n a n d W om en:
Desire for Income, Not Capital Gains,
Makes Savings Accounts Attractive
By LOUIS C. FINK
AM R E T IR E D after almost 45
years in banking. Compliments of
my employer, social security and a few
investments of my own, I have an ade
quate— although fixed—income. I have
not been pushed too hard to meet the
rising cost of living.
But recently, the rent on my apart
ment went up $20 a month— $240 a
year—and it began to hurt. I looked
around at my assets, found almost
$10,000 in a 5% bank savings account
and switched to a six-year certificate
paying 7 /2%. Presto! I had an extra
$250 to meet the rent increase.
I had carefully nursed the $ 1 0 , 0 0 0
in a savings account for an emergency,
possibly even to make a deposit on a
home. Rut if the emergency arises, I
can borrow against the certificate, and
the loss will be small.
I cite my own case only to make a
point: that retired people may have
no great desire to increase their capital.
In many cases, they don’t want to in
crease the size of their estates. What
they want—what I want and need—is
I
own eventual retirement— may well
look for an investment that will appre
ciate in a few years. I did it myself.
But now that I’m retired, with my
obligations to the children discharged
and only my wife to provide for, I
need income. Apparently, a lot of other
retired persons feel the same way, and
the proportion of older people in the
population goes up every year. This
may be one of the unnoticed reasons
for the current interest in savings de
posits. Here in North Carolina where
I write, the switch to savings is pro
nounced— whatever the reason. At the
end of 1963, our banks held deposits
of $1.64 billion, of which only 38% was
drawing interest (this from a story in
the Raleigh N ew s and Observer).
On March 31, 1976, our banks had
deposits of $4.05 billion, and 63% was
earning interest. That’s up 2% over the
previous quarter, and the trend isn’t
slowing.
People are learning that money
makes money. Of course, a lot of that
" I suggest t h a t m ore and
m ore m o n ey w ill be placed
in ba n k savings accounts by
re tire d men a n d w o m en w ho
a re looking fo r income and
not fo r cap ital g a in s /'
income to make retirement pleasant.
Someone is always suggesting a flier in
options, in common stock, in real es
tate. ‘'You’ll get rich; you can’t go
wrong.” But I don’t want to get rich
in the sense of appreciating capital;
I ’d like more income, without risk.
So a bank savings account looks
good. Years ago, a leading investment
banker told me I was silly to keep that
$10,000 on deposit at 5%. “Anybody
can pick stocks on the Big Board,” he
told me, “and see the price go up more
than 5% a year. You’re not even keep
ing up with inflation.”
I chose a few stocks in my mind,
and they are all worth less today than
when I got the advice. My $10,000 is
still in the bank, even if the interest
did not keep up with inflation.
Young people—looking forward to
expensive college for the kids or their
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
. . retired people m a y
have no g r e a t desire to in
crease their c a p ita l. In m a n y
cases, th e y d on 't w a n t to in
crease the size of th eir es
tates. W h a t th e y w a n t . . . is
income to m a k e re tire m e n t
p le a s a n t."
money is owned by corporations, which
learned a long time ago that they
could whittle their demand deposits to
the bone.
But the banks have learned that the
good-paying savings deposits can be
attractive to customers (if the banks
can be smart enough to make good
loans and investments to cover the in
terest payments). Here in the Old
North State, many banks deliberately
have made it easy for individuals to
keep minimum checking accounts— and
put the rest in savings. They have au
tomatic overdraft plans, which sound
more and more like the ancient British
system. If your checking account is
overdrawn, the Carolina banks will ap
ply “Ready Reserve,” “Check Credit,”
“The Advantage” or “Cash Reserve.”
A loan is made automatically to cover
the overdraft.
In reverse, some banks long have had
plans for regular transfer of funds from
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checking to savings accounts. The de
positor has another tool for keeping his
checking account at a minimum and
his savings at a maximum.
Because my memory goes back al
most 50 years, I can remember work
ing for two banks that didn’t accept
savings accounts at all—except in spe
cial cases for important customers.
How the world has changed!
It may be that the mass of depositors
has become more knowledgeable about
investing money, just as corporations
have. Yet they are not all sophisticated
enough to fuss with short-term govern
ments or tax-exempt municipals or some
other high-paying investments.
I suggest that more and more money
will be placed in bank savings accounts
by retired men and women who are
looking for income and not for capital
gains. A bank does not guarantee a re
turn on savings forever, but six years
look fairly long to an investor who is
65 or more. * *
Mail-Opening System
(Continued from p age 16)
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The MONTELEONE is “a way of
life" . . . the largest Hotel in the
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Swimming Pool— the French Cuisine
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utes from International Trade Mart
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NEW ORLEANS, LOUISIANA 70140
Phone: 504/523-3341
For further information and brochure
Write Dept. RH Sales.
seven times on Saturday and four times
on Sundays and holidays. The greatest
volume of mail is picked up between
6 :3 0 a.m. and 1:15 p.m., and the
smallest volume in the afternoon, when
the post office is busy processing out
going mail. St. Louis is fortunate in
having one of the best post offices in
the country.
Mercantile is able to handle this tre
mendous workload because of the
equipment the bank has installed in its
lock box department, particularly be
cause of the automated mail-opening
system that went into operation there
early this year. Called Encore 3000 LM,
it is manufactured by Stephens Indus
tries, Inc., Lenexa, Kan. (a Kansas
City, Mo., suburb). The equipment is
designed to handle large-volume in
coming mail in m ixed sizes ranging
from 3/2 inches to 6/2 inches in height
and from five inches to 1 0 M inches in
length. Mercantile’s equipment has an
adjustable operating speed of 900 to
3,000 envelopes per hour.
Here is how the Encore 3000 LM
works:
STEP NO. 1—Incoming envelopes
are received and loaded continu
ously into the magazine jogger.
Envelope contents then are set
tled to the bottom by the jogging
action of the magazine, which has
a capacity of about 800 envelopes.
After settling the contents of the
envelopes, the mechanism moves
the individual envelopes into the
system.
STEP NO. 2— Quickly, without
damage to the contents, the mech
anism opens the top and two sides
of the envelopes and then spreads
the two sides open, exposing the
contents.
STEP NO. 3— The exposed con
tents of the envelopes are indexed
by tray conveyor to the operator
stations, where the contents are
processed. Lights mounted on the
overhead table illuminate the tray
conveyor.
STEP NO. 4—The processed en
velopes, with the contents re
moved, are moved to the end of
the system. Disposal is accom
plished automatically by the En
core 3000 LM trash conveyor.
Mr. Scaggs points out that the new
equipment has several advantages: Be
cause it takes mixed sizes of envelopes,
First of Denver Plaza Dedicated
The o fficial d e d ic a tio n o f First o f D e n v e r P la z a w a s h eld re c e n tly a n d w a s h ig h lig h te d b y th e
p la c in g o f a tim e cap su le , c o n ta in in g m o re th a n 5 0 item s, n e a r th e c o rn e rs to n e o f th e First of
D e n v e r P la z a B u ild in g . C a p su le is to be o p e n e d in 2 0 7 6 . LEFT: T h e o d o re D. B ro w n (I.), p res.,
First o f D e n v e r, a n d D e n v e r M a y o r W illia m H. M cN ich o ls help First o f D e n v e r C h . Eugene H.
A d a m s (r.) d is p la y C o lo ra d o c e n te n n ia l fla g b e fo re p la c in g it in cap sule (seen on s id e w a lk ).
R IG HT: D e d ic a tio n cerem on ies fo r 1 6 ,5 0 0 s q u a re -fo o t p la z a fe a tu r e d t a lk b y M a y o r M cN ich o ls a n d
p o e try r e a d in g b y T h o m as H o rn sb y F errill. $ 2 6 -m illio n p la z a co m p le x is h o m e fo r First o f
D e n v e r a n d First N a tio n a l B a n co rp ,, HC c o n tro llin g b a n k .
80
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Federal Reserve Bank of St. Louis
MID-CONTINENT BANKER for August, 1976
less sorting and setup time is needed
to prepare the envelopes for the
machinery. During the first month it
was used, an analyst determined, on
the basis of the standard-hour concept,
that the output on the Encore 3000
LM was three times more than would
have been done by opening the en
velopes manually, and with much less
effort. During the first three weeks of
its operation, a study showed that on a
departmental average, 563 items were
processed by each employee using the
new equipment, compared with only
248 per hour if processed manually.
After employees became more familiar
with the Encore 3000 LM, the number
of envelopes processed per hour per
employee went up to 725, about three
times as much as could be processed
manually.
On a median basis, each Mercantile
lock box employee can process 604 en
velopes per hour on the new machin
ery, but previously, when done by
hand, this number was only 216, or a
ratio of 3-to-l.
During the first five weeks after the
equipment was installed, the lock box
department processed 300,000 pieces
of mail on the Encore 3000 LM, with
a minimum of mechanical problems,
according to Mr. Scaggs. He added
that the employees are happy with the
system.
Charles E. Benkert, operations of
ficer at Mercantile, says the Encore
3000 LM has helped the bank smooth
operational peaks and valleys. He de
scribes the monthly activity in the lock
box department as “highly cyclical,
with four to five times as much mail
being received around the first of the
month as is received around the third
week of the month. With the number
of mail pieces being processed growing
at an annual 1 0 % rate, he continues,
the new equipment has helped the de
partment through the increased work
load without having to add employees.
With the addition of the Encore
3000 LM, however, according to Mr.
Benkert, he has been able to reduce
the need for temporary employees in
the department. He adds that there has
been a slight increase in the permanent
staff, but not nearly as much as would
have been necessary, because of the
continuously increasing workload, had
the bank not installed the Encore 3000
LM. Without Encore, says Mr. Ben
kert, the bank would have had to
spend more money on tempoarry help.
With Encore, he adds, the department
is providing better services for its cus
tomers and handling more items. In ad
dition, he says, the turnaround time on
receving and processing items has been
cut in half.
Mr. Benkert now finds it easier to
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Healthy
Investments
Health care. The demand for greater efficiency in health
care services was never more in the news. And it's increasing
every day.
Financing the building and modernization of hospitals,
clinics and nursing homes is a long-term specialty of B. C.
Ziegler and Company.
In over 60 years, we have underwritten more than $2 billion
in institutional financing. The size range of our issues is
quite broad —from $500,000 to $40 million —conventional
and tax exempt.
We offer bond issues with a choice of serial maturities,
one to fifteen years, and with a record of consistently high
yields. 30 day to 9 month interim paper is also available.
You will find these investments well worth considering for
your bank's portfolios and for those of your customers.
Write, or call us collect for information about our latest
offerings. Offices in leading cities, coast to coast.
B.C. Ziegler and Company
West Bend, Wisconsin 53095 • Phone (414) 334-5521
O n e of t h e fina nci al s e r v i c e a rm s of T h e Z i e g l e r C o m pa ny , Inc.
81
put together an employee work sched
ule because he knows, with the Encore,
how many employees are needed to
turn out a certain number of items, and
there are no bottlenecks. Thus, it is an
effective management tool for the bank.
The Encore is described by Mr.
Scaggs as a cash-management tool for
lock box cutsomers because it reduces
float and gets customers’ money into
their accounts faster than if the items
were processed by hand. In fact, a
Mercantile lock box customer is ad
vised daily, and sometimes more than
once a day, as to the amounts credited
to his account.
Mercantile’s lock box operation
works like this: After the mail is picked
up at the post office and delivered to
the department, it is opened, the con
tents removed and the checks pro
cessed are accumulated. Checks re
ceived and included in the deposits are
batched or divided into groups of 1 0 0
each and proofed while being MICR
encoded on NCR encoders. Credits (in
voices, key-punched slips, etc.) also are
proofed. When the two totals agree,
that particular group of checks (or par
tial deposit) is complete. The credits
then are sent to the various companies
by mail, by computer printouts or by
on-line ties with their computer ser
vices so these firms can bring their
Let our
billion dollar
organization
help your bank
profit. Call
John Hixon (205/832-8343),
a member of our correspondent
banking team.
Fireplug Painfing:
Happy Hydrant' Hoopla
Is Donation to Bicentennial
First Alabama Bancshares, Inc.
Affiliate Banks
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
First Alabama
Bank of Montgomery, N.A.
Bank of Birmingham
Bank of Huntsville, N.A.
Bank of Tuscaloosa, N.A.
Bank of Dothan
Bank of Selma, N, A.
Bank of Gadsden, N.A.
Bank of Athens, N.A.
Bank of Baldwin County, N.A.
Bank of Guntersville
Bank of Hartselie
Bank of Phenix City, N.A.
Bank of Mobile County
RrsUXIabama
82
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Federal Reserve Bank of St. Louis
ledgers up-to-date. Of course, checks
drawn on other banks are sent to those
banks after being processed.
All checks passing through the lock
box department are microfilmed for
permanent records, as are the deposit
slips.
Written complaints, requests for en
velopes, address changes and other
messages that accompany payments are
forwarded to the proper firms for an
swering.
Just as in other banking operations,
the world of electronic transfers has
become a part of the lock box opera
tion. As Mr. Scaggs points out, infor
mation gathered in Mercantile’s lock
box department can be put on mag
netic tape and transmitted over tel
ephone lines to a corporate customer’s
computer; it can be transmitted via
telephone, or it can be sent over
IE L E X or TWX equipment via fiveand eight-channel tape.
In less than 25 years, since Mercan
tile began offering lock box service in
the early 50s, the bank has seen ac
counts in that department grow from
an original 1 0 to approximately 300 to
day. Therefore, equipment such as the
Encore 3000 LM, with its capability
of reducing operating and personnel
costs, but increasing the amount of
work processed, is an important part of
its lock box system. • •
Fireplugs in Freeport, 111., have tak
en on a happier look, thanks to a bicen
tennial program of State Bank.
The institution invited local citizens
to join in its “Happy Birthday to
America, Happy Hydrants to Freeport”
event, wherein people painted fireplugs
with original designs. The program had
three categories: bicentennial, local
history and contemporary.
The event was cosponsored by the
Freeport Water & Sewer Commission
and the local True Value Hardware
Store. It has been endorsed by the
Stephenson County Bicentennial Com
mission and certificates of recognition
were awarded to all participants.
Local community college art stu
dents painted a select group of fire
plugs in the downtown Freeport area
prior to the program’s introduction to
the public. Those hydrants were paint
ed to resemble such well-known char
acters as Johnny Appleseed, Pocahon
tas, Lucy Van Pelt of the “Peanuts”
gang, the Statue of Liberty and that
famous firefighter, Smokey the Bear.
MID-CONTINENT BANKER for August, 1976
In correspondent
banking services, w e’re
the specialists.
Here’s how First Chicago,
an $18 billion banking corporation,
can help you serve your customers more productively.
You know what your correspondent
banking needs are. You also know what
services your present correspondent
bank provides.
Check this list of First Chicago's com
prehensive services. See if there aren't
many ways we can work together more
productively.
Then call a correspondent banker at
First Chicago, (312) 732-4101, or write us.
DATA PROCESSING
Point-of-Sale Techniques
Bank Accounting Services
Bank Information Systems
Electronic Funds Transfers
CREDIT FACILITIES
Holding Company Lines of Credit
Participations: Upstream and Downstream
Intermediate Term Credit
Liquidity Lines of Credit
Commercial Finance Services: Inventory and
Receivable Financing
Corporate Financing Advisory Services
Leasing Activities and Analysis
Credit Information
Small Business Administration:
Loan Counsel
MANAGEMENT ASSISTANCE
Loan Portfolio Review Techniques
Economic Forecasting
Profit Planning and Forecasting
Marketing and Business Development Advice
Operations Planning
Organization Planning
SPECIAL CORRESPONDENT SERVICES
Annual Correspondent Conference
Account Referrals
Mini-conferences and Workshops,
Special Events Planning
Record Retention and Reconstruction
Cash Management Consulting: Collection,
Concentration, Disbursement and Control
FOCUS: Lockbox Location Model
Visual Aids: Slides and Closed Circuit
TV Production
TRUST BANKING
Personal and Corporate Trust Services
Trust Investment Advisory Services
Monthly Investment Services
Stock Transfer and Shareholders Services
Dividend Reinvestment
PERSONAL BANKING ASSISTANCE
Bank Promotions
YES Card"*
BankAmericard®
Savings Programs
Automobile Leasing Program
Bank-At-Work/Direct Deposit Program
OPERATIONAL SERVICES
Cash Letter Clearings: End-Point &
Float Analyses
Check Retention
Coin and Currency
Collections
Money Transfer
Federal Reserve On-Line Settlement
Securities Custody
Security and Coupon Collection
Payroll Accounting
INVESTMENTS
Government Securities
Municipals
Federal Agency Securities
Federal Funds
Repurchase Agreements
Commercial Paper
Certificates of Deposit
Treasuiy Tax and Loan Accounts
Money Desk Reviews
Portfolio Analysis Services
INTERNATIONAL BANKING
Worldwide Locations
Merchant Banking
Money Market
Instruments
Letters of Credit
Foreign Exchange
Transactions
Transfers and
Remittances
Ex-Im Financing
FirstChicago
Productive services for banks and bank holding companies.
MEMBER FDIC
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
83
NEWS
Fro m the M id-Continent A re a
Alabama
Arkansas
■ JE S SE “JIM ” LANCASTER JR. has
been named auditor of First National,
Mobile, succeeding I. Ray Gockley,
who has been elected assistant vice
president, commercial loan department.
* WORTHEN BANK and First Mort
gage Co., both of Little Rock, have
agreed in principal for the bank to ac
quire First Mortgage. Subject to regu
latory approval, the resultant company
would operate as Worthen First Mort
gage Co., a wholly owned subsidiary
of the bank. In addition, Worthen Bank
and First National, Hot Springs, have
sought regulatory approval to form the
jointly owned firm, First Arkansas
Small Business Investment Corp.,
which would be headquartered in Lit
tle Rock. Both banks are subsidiaries
of First Arkansas Bankstock Corp.,
Little Rock.
■ ROSAMOND R. CROW DER has
been elected vice president and trust
officer, First Alabama Bank, Montgom
ery. Named assistant vice president
was Bemadean S. Clark. Clinton C.
Berry Jr., Thomas E. Head III, Mildred
O. Markwell and Allen I. Rushing have
advanced to trust officers.
■ JAM ES H. MATHIS has joined
Commercial Guaranty Bank, Mobile, as
a member of the marketing depart
ment. He formerly was with Union
Planters National, Memphis.
Ark. Banking School Officers
Terry Y o u n g (r.) has bee n elected pres., B a s ic /
In te rm e d ia te Class, A rk . B a n k in g School, w hich
w a s held in Little Rock June 2 0 -2 5 . M r. Y o u n g
is consum er In. o ff., Sim m ons First N a t'l, Pine
B luff. O th e r class officers a re (fro m I.) tre a s .—
Joe E a rp , a .v .p ., C itizen s Bonk, B o o n e v ille ;
sec.—Ju d y Sligh, a d m in , o ff., C itizen s First N a t'l,
A r k a d e lp h ia ; a n d v .p .— D elores L a ffe rty , op.
o ff.. Security B a n k, H a rris o n .
Junior Bankers Pick Officers
■ W ILLIAM DOUGLAS CLO VER
has joined Worthen Bank, Little Rock,
as vice president for commercial loans.
Mr. Glover formerly was president,
Guarantee Bank, Atlantic City, N. J.
■ JAM ES R. CALLOWAY has been
named senior vice president, Exchange
National, Montgomery. He formerly
was CEO, Bank of the South, Enter
prise.
■ W ILLIAM H. R EIM ER S has joined
First National, Mobile, as vice president
and will be responsible for the person
nel department. He formerly was with
Flagship Banks, Inc., Miami.
The n e w ly elected officers o f th e Ju n io r B a n ker
Section o f th e A rk .B A get to g e th e r fo r a p h o to
Merchants N a t'l of M o b ile Is 75
a t th e Ju n io r B a n kers' E d u c a tio n a l C o n fe re n ce
(fro m I.): B a rt Lindsey, m k tg . o ff.. First N a t'l of
P h illips C o u n ty,
a.c., First N a t'l,
H e le n a — p res.; Bruce L oftin,
F a y e tte v ille — v .p .; Jim K elly
I II , d ir. o f m k tg ., First A m e ric a n N a t'l, N o rth
Little Rock— sec.; a n d Jam es E. S to b a u g h , a .v .p .,
N a t'l B ank o f C o m m erce , Pine B lu ff—tre a s .
Ernest F. Ladd Jr. ( r .), ch., M e rc h a n ts N a t'l,
M o b ile , e x a m in e s th e b a n k 's 1 9 0 2 le d g e r w ith
C a rro ll R u b ira d u rin g th e w e e k o f M e rc h a n ts '
7 5 th a n n iv e rs a ry . M r. R u b ira still m a in ta in s
sav in g s account N o . 1, w h ic h w a s o p e n e d by
his uncle, Luther Fry (in p h o to on w a ll) , a
fo u n d in g d ir. a n d first pres, o f th e b a n k . A ll
accounts in th e le d g e r w e r e h a n d w ritte n by
Ernest F. Ladd Sr., fo rm e r ch. In a d d itio n to th e
le d g e r, a collection o f o th e r m e m o ra b ilia w a s
d is p la y e d in th e b a n k 's lo b b y d u rin g th e a n n i
v e rs a ry w e e k .
84
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Federal Reserve Bank of St. Louis
HARROW SMITH C O M P A N Y
/
U n ion N a tio n a l B a n k B ld g .
5 0 1 /3 7 4 - 7 5 5 5
Little Rock, A rk a n s a s
J. E. W O M E L D O R FF, E x ecu tive V ic e P res id en t
Banking Students Honored
H o n o re d as th e to p stu d en ts in th e B a s ic /ln te r m e d ia te class, A rk . B a n k in g School, w e r e
(fro m I.) M ic h a e l Flynn, cash., A m e ric a n S tate,
C h a rle s to n ; Joe W o o d , a.c ., S ta te First N a t'l,
T e x a r k a n a ; a n d Steve M cF erro n , In. o ff., M e r
c a n tile B a n k, Jo n esb o ro . The A rk . B a nking
School is spo nsored by th e
held recen tly in Little Rock.
A rk .B A
and
w as
MID-CONTINENT BANKER for August, 1976
Illinois
a HARRIS
BANK,
Chicago, has
named the following vice presidents:
Mary B. Bowman, section manager,
personal banking; Hans J. Eigner,
charge card division head; Mark C.
Ubelhart, corporate financial services;
and Thomas A. Wick, investment
analyst and management sciences di
rector.
B GERALD R. JAREMA has been
elected president of Heritage Bank of
Country Club Hills. He entered bank
ing in 1956 at Pullman Bank, Chicago,
an affiliate. Prior to his election, Mr.
Jarema was vice president and indus
trial banking department manager,
Heritage/ County Bank, Blue Island, an
other affiliate.
a FR E D E R IC K C. M EYERS, vice
president, Central National, Chicago,
has been elected a director of the
bank’s parent HC, Central National
Chicago Corp.
a CONTINENTAL ILLIN O IS NA
TIONAL, Chicago, has elected the
following vice presidents: Michael T.
Conroy, Joseph W. Murray, Thomas
J. O’Bryant, William A. Page, Daniel
C. Rohr, Daniel T. Zapton, Darold D.
Hoops, V. Edward Kuhl, Thomas A.
Dean, Robert G. Schiewe and George
H. Conrad.
a DONALD J. KLEIN has joined
United Bank of Ogle County, Oregon,
as vice president. He formerly was
with United Financial Services Corp.
as auditor.
a F IR ST BANK O F Oak Park has
announced that Tom Wilson and Har
ris Mammen have been elected vice
presidents. Mr. Wilson will direct the
installment loan division, while Mr.
Mammen will head the credit depart
ment, commercial loan area.
B PH ILLIP C. W ISE has been elect
ed president, CEO and a director of
South Shores National, Decatur, replac
ing William Barnes III, who resigned.
Mr. Wise, who is senior vice president
and cashier, Citizens National, De
catur, has been closely associated with
South Shores National in an advisory
capacity for the past 1 0 years.
B KENNETH HAMAGUCHI has been
appointed assistant cashier, Drexel Na
tional, Chicago. He has been there
since 1972.
a ANTHONY W. SC H A U M LEFFEL
has joined Archer National, Chicago,
as assistant cashier. He previously
served Moline National and Bank of
Ravens wood, Chicago.
Donald H. Myers Dies
D o n a ld
H.
M y e rs ,
41,
s .v .p ., C o n tin e n ta l Illi
nois
N a t'l,
C h ica g o ,
d ie d Ju ly 4 a t a local
h o s p ita l. H e a d o f th e
p la n n in g , resea rch a n d
d e v e lo p m e n t
d ivis io n ,
o p e ra tio n s a n d
a g e m e n t services
M r. M y e rs jo in e d
tin e n ta l B ank in
m an
d e p t.,
Con
195 8
a n d w a s elected s.v.p.
in 1 9 7 2 . He w a s a p
p o in te d
head
o f his
d iv is io n
in June.
B RO BERT A. MORROW, president,
Lincoln Financial Corp. and Lincoln
National, both of Fort Wayne, has
been elected to the additional posts of
chairman of both firms, succeeding the
late Willard Shambaugh. Named exec
utive vice president and chief operat
ing officer was Carl A. Gunkler, while
John L. Hoffer has been appointed vice
president and senior trust officer in
charge of the bank’s trust department.
Mr. Morrow joined the bank in 1973,
going from Union Bank, Kokomo, and
Mr. Gunkler has been with the bank
since 1939. Mr. Hoffer most recently
served Kanawha Valley Bank, Charles
ton, W. Va.
B H ER BERT C. PEPM EIER , execu
tive vice president and assistant trust
officer, has retired from Security Bank,
Vincennes, after 30 years. He will re
main as a director. Mr. Pepmeier joined
the bank in 1946 as a bookkeeper, ad
vancing to his latest position last year.
Kansas
B COLEEN CARTER has been ap
pointed marketing representative, First
National, Olathe. She has been with
the bank one year.
a GEORGE N. VA N D ERBILT has
been named vice president in charge
of data processing at Mission State.
Prior to joining Mission State, he
served 17 years with Commerce Bank
of Springfield, Mo.
B RO BERT G. W ALL has joined
Boulevard State, Wichita, as vice presi
dent-commercial loans, going from
Union National, Wichita.
Indiana
HARRIET
BROWN,
president,
Springs Valley National, French Lick,
has been in banking 50 years. Miss
Brown entered banking at West Baden
National, West Baden Springs, in 1926,
advancing to vice president in 1950.
The bank subsequently merged with
French Lick State, becoming Springs
Valley National. Miss Brown was
named president in 1971.
B
N e w Bank Commissioner
TOPEKA—Emery E. Fager, pres.,
Commerce State here, has been
named state bank commissioner,
succeeding Arthur Gabriel. Mr. Ga
briel, pres., De Soto State, resigned
July 1 because of ill health.
Mr. Fager, a banker since 1936,
helped found Commerce State in
1959.
COMME RCI AL
N
A
T
I O
B
A
N
K
N
A
L
6th & Minnesota Ave. 913 371-0035
Kansas City, Kansas 66101
«s
MAX DICKERSON
MID-CONTINENT BANKER for August, 1 976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
85
■ RON H ELLER has joined Fourth
National, Wichita, as marketing repre
sentative. He formerly was on the bas
ketball staff of Wichita State Univer
sity.
■ THE BOARDS of Mississippi Bank,
Jackson, and Truckers Exchange Bank,
Crystal Springs, have agreed to a merg
er. Final ratification and regulatory ap
proval are pending.
■ BROOKHAVEN BANK has an
nounced the promotions of Pauline H.
Jones to vice president, administration;
Elsie H. Nettles, to vice president and
cashier; and Sue Laird, to manager,
Brookhaven Drive-Up Branch.
HELLER
■ VANN I. DOYLE, formerly vice pres
ident-correspondent department, Louis
ville Trust, has joined Winchester Bank
as vice president in charge of market
ing and advertising.
■ FR E D N. ROSILEVAC JR. has
been elected assistant trust officer, Se
curity National, Kansas City. He for
merly had a private law practice. In
addition, Mike Kilderry, the bank’s for
mer supervisor of collections, has ad
vanced to assistant loan officer.
Louisiana
Clebert C. Smith Dies
C le b e rt
L o u isiana
m ission er
Kentucky
■ CITIZEN S F ID E L IT Y BANK, Louisville, has promoted the following to as
sistant vice presidents: Charles J. Fos
ter Jr., manager, central information
services; David Bryant and Jerry L.
Skidmore, automated customer ser
vices; and J. Stephen Rogers, manager,
Hikes Point Banking Center. Jerry M.
Weaks has been elected trust officer;
and Roger Skidmore, manager, Fif
teenth and Hill Office, has been named
assistant cashier and manager.
■ F IR S T NATIONAL, Louisville, has
elected the following vice presidents:
Craig D. England, James M. Farson,
Lawrence F. Hysinger and Charles E.
Scott Jr.
FDIC Announces Payoff
The FDIC has announced that it
will commence payment of insured
deposits in the Mt. Zion Deposit
Bank at the bank’s office.
The bank was found to be in
solvent pursuant to a circuit court
order and on petition of the state
commissioner of banking and secur
ities, with the FDIC appointed re
ceiver June 25. The corporation esti
mates tire bank has 420 depositors
with deposits totaling about $500,000. All deposits are covered by the
FDIC.
The FDIC’s decision to commence
the payoff reportedly was reached
after efforts to arrange a deposit as
sumption transaction with FDIC fi
nancial assistance had proved un
successful.
86
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
C.
Sm ith,
74,
■ HANCOCK BANK, Gulfport, has
opened its new Bay St. Louis Office.
Located on Highway 90 West, the
building is of colonial architecture and
has 4,000 square feet of space. Three
covered pneumatic-tube drive-up sta
tions now are in service and two more
will be added in the near future. Man
ager of the office is James Ginn, assist
ant vice president.
Missouri
sta te
com
o f fin a n c ia l
in stitu tio n s, has d ie d .
He e n te re d b a n k in g in
1 91 6 in M a n s u ra , s e rv
ing w ith t w o
b an k s
th e re u n til 1 93 0, w h e n
he e n te re d th e state
b a n k in g d e p t. L ea vin g
th e
d e p a r tm e n t
in
1 9 5 1 , M r. Sm ith jo in ed
N a t'l Bank
of Com
m erce, N e w O rle a n s , a
s.v.p . He re tire d as
e .v .p in 19 6 8 a n d w a s a p p o in te d sta te com m issioner in 1 97 2.
■ GUARANTY BANK, Alexandria,
has named Harold L. Hayes and
Lynn Bordelon accounting officers. Mr.
Hayes joined the bank in 1971 and Mr.
Bordelon, in 1974.
■ M ICHAEL A. FLIC K , vice presi
dent, First National Bank of Com
merce, New Orleans, has advanced to
senior vice president. He heads the
special industries and loan administra
tion divisions. Named assistant vice
presidents were Michael W. Alston
and James W. Webre III. Mr. Alston
also was elected manager, Lake Forest
Office, while Mr. Webre was appoint
ed Main Office operations manager.
W. Dale Martin has been elected mar
keting officer and manager, First Ad
vertising.
■ W ILLIAM LeGRANDE RIVES has
joined First National in St. Louis as
vice president. He has responsibility
for electronic data processing systems
and programming and formerly was a
principal with Lifson, Wilson, Fergu
son & Winick, Inc., Dallas.
■ UN ITED M ISSOURI BANK of
Kansas City has announced a number
of promotions: Gilbert H. Bledsoe Jr.,
Keith O’Rourke and James C. “Pat”
Thompson Jr., to senior vice presidents,
bond department; Barbara Carlson and
Larry V. Parman, to vice presidents,
bond department; Benjamin C. Adams
and Thomas J. Wood III, to vice presi-
WOOD
ADAMS
RIVES
BLACKBURN
M is s is s ip p i
■ JER R Y H. SW ETLAND has been
named executive vice president, South
ern National of Hattiesburg, Biloxi. He
helped open and served as vice presi
dent and senior loan officer, Fidelity
National, West Memphis, Ark., prior
to joining Southern National.
MID-CONTINENT BANKER for A ugust, 1976
We made our mark
in leasing
Since 1974, Citizens Fidelity Leasing Corpora
tion has negotiated over $10 million worth of
equipment financing either directly to or in
participation with more than 100 banks. Part
of the reason for this success is the commit
ment of Citizens Fidelity towards serving the
capital needs of its correspondents and their
customers. Just as important, M ike Maxwell,
president, and his staff are leasing profes
sionals, experts at showing the banks they
work with how they and their customers can
benefit from the financial and other advan
tages leasing provides. Call them at (502)
581-2686. They can help you make your
mark, too.
©
Citizens I Fidelity Leasing Corporation
C itizens Plaza— Louisville, K entucky 40202
Come grow w ith us® . . . under the Sign of the Service Tree
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
87
dents, correspondent department; Ste
phan P. Blackburn, to assistant vice
president, correspondent department;
and J. R. “Ron” Hybarger, to assistant
vice president, bond department.
■ VERMAN
C. BACHMAN has
joined Mercantile Trust, St. Louis, as
agricultural officer. He formerly was
with the U. S. Small Business Admin
istration. William Clark Adreon Jr. has
been named assistant vice president at
Mercantile Trust, while Michael T.
Normile has been elected accounting
officer. Mr. Adreon formerly was with
United Missouri Bank, St. Louis, and
Mr. Normile formerly was with the
Ernst & Ernst accounting firm.
St. Louis C learing House Cited
service banking center is plants and a
225-gallon aquarium with more than
200 varieties of tropical fish. The lobby
of the building contains hundreds of
exotic plants arranged in specific dis
plays and the structure’s exterior has
been landscaped with planter boxes
and a horseshoe-shaped garden. Con
sultant for the project was Bank Build
ing Corp., St. Louis.
■ NORMAN D. HOLST has been
elected assistant vice president, real
estate, Commerce Bancshares, Inc.,
Kansas City, while Carl B. Short has
been named marketing officer and
sales promotion manager.
Jam es E. B ro w n (r.), pres., M e rc a n tile B a n co rp .,
Inc., St Louis, accepts an a w a r d
th e
St.
Louis
C le a rin g
F rid le y , exe c, d ir .,
a w a rd
w as
a p p re c ia tio n
Louis'
house.
th e
Deaconess
by
R o b ert
F o u n d a tio n .
th e
c o n tin u in g
H o s p ita l
on b e h a lf o f
fro m
Deaconess
p re s e n te d
of
House
by
fo u n d a tio n
s u p p o rt
th e
N.
The
in
o f St.
c le a rin g
Legislation, EFTS A re Topics
Scheduled for M BA Regionals
ED W AR DS
BACHMAN
■ W ILLIAM L. EDW ARDS JR.,
chairman and CEO, Interco, Inc., has
been elected a director of Boatmen’s
Bancshares, Inc., St. Louis. He has
served as a director of the HC’s lead
institution, Boatmen’s National, St.
Louis, since 1972.
■ W ALTER L. SAVIO JR. has been
promoted from cashier to vice presi
dent at Laurel Bank, Kansas City. Suc
ceeding him as cashier is Roy C. McCallop, who previously was assistant
credit manager, Milgram Food Stores,
Inc. Robert L. Maddern has been ele
vated from assistant cashier to assistant
vice president at the bank.
Young Bankers Choose Leaders
N a m e d 1 9 7 6 -7 7 ch. a n d v. ch., re s p e c tiv e ly , o f
the M iss ouri Y o u n g B a nkers w e r e K e n n eth R.
T ie m e y e r (I.), v .p ., C o lo n ia l B a n k , Des Peres,
a n d R ichard A d a m s , v .p ., B ank o f Sikeston.
The election w a s held d u rin g th e Y o u n g B a n k
ers S e m in a r a t T a n -T a r-A resort a t th e Lake o f
th e O z a rk s .
88
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Legislation, particularly on the fed
eral level, and electronic funds transfer
systems will be discussed during the
Missouri Bankers Association’s regional
meetings this fall. The business ses
sions will be lengthened by an hour so
that there will be enough time to cover
all the topics scheduled.
Legislative subjects on the program
will
include
holder-in-due-course,
RESPA and fair credit reporting.
The dinner speaker at each meeting
will be J. N. “Chris Christianson, de
scribed as a “motivator.”
The meeting schedule is as follows:
September 13— Region One—
Moberly
September 14— Region Two—
Trenton
September 15— Region Three—
St. Joseph
September 16— Region Four—
Kansas City
October 18— Region Five—
Washington
October 19— Region Six—•
Cape Girardeau
October 20— Region Seven—
Springfield
October 21— Region Eight—
Jefferson City.
■ P E TE R C. BA ERV ELD T, presi
dent, Brentwood Bank, has been elect
ed president of the St. Louis Chapter
of Robert Morris Associates for 197677. Other chapter officers for 1976-77
are Robert L. Trautman, executive vice
president, Southern Commercial Bank,
St. Louis—vice president; and Hord
Hardin II, executive vice president,
Manchester Bank, St. Louis— secretarytreasurer.
■ j a m e s w. M cL a u g h l i n has
joined Plaza First National of West
Port, St. Louis County, as assistant vice
president and trust officer. He is in
charge of the trust department.
■ PROMOTIONS have been an
nounced by Ameribanc, Inc., St. Jo
seph, in two of its subsidiary banks. At
American National, St. Joseph, Garold
L. Grable has been named assistant
vice president, installment loan depart
ment, and Layton E. Voorhees has
been elected consumer loan officer. At
Belt National, St. Joseph, Robert A.
Swymeler has been promoted to con
sumer loan officer.
Clay Honored by KC Fed
■ BOATMEN’S BANK of West Coun
ty, Ballwin, has celebrated the opening
of its remodeled building, which is of
brick and glass and has more than
6,500 square feet of added space. Ad
ditions include three lobby teller sta
tions and two drive-up stations. The
focal point of the bank’s new personal
F la n k in g a p o r tr a it o f G e o rg e H. C la y , re tire d
p res., K ansas C ity Fed, a re R o b ert T. Person
(I.), ch., M r. C la y a n d R oger G u ffe y (r.) pres.
M r. C la y , w h o re tire d F e b ru a ry 2 7 , w a s h o n
o red b y th e p o r tr a it fo r his le a d e rs h ip a n d
c o m m itm e n t to th e o b jectiv es o f th e F e d e ra l
Reserve System . The p o r tr a it w ill h a n g in th e
Fed's b o a rd room .
MID-CONTINENT BANKER for August, 1976
New Mexico
Oklahoma
■ FRANCES C de BACA, assistant
cashier, trust department, First Nation
al, Santa Fe, has been elected presi
dent, Northern New Mexico Chapter,
American Institute of Banking. Other
chapter officers are James Bailey, vice
president, First National of Rio Arriba,
Española—first vice president; Richard
Grimes, assistant vice president, Santa
Fe National—second vice president;
John Rodriguez, assistant vice presi
dent, El Pueblo State, Española—trea
surer; and Truttie Hester, Capital Bank,
Santa Fe— secretary.
■ THOMAS S. SISSON has rejoined
Bank of Oklahoma, Tulsa, as vice presi
dent, personal banking. He originally
joined the bank in 1950, leaving in
1972 to become president, City Bank,
Tulsa. At Bank of Oklahoma, Mr. Sis
son manages the new building lobby.
■ RONN HAGAR has been elected
vice president and loan review officer,
First National of Lea County, Hobbs.
He joined the bank in 1973.
■ RUDY BARELA has been elected
vice president, Farmers & Merchants
Bank, Las Cruces. He has been with
the bank since 1965.
■ GORDON J. CHARLTON has been
elected a director of First National,
Las Vegas.
■ SAN JUAN NATIONAL, Farmington, has filed an application with the
Comptroller of the Currency to relo
cate its main office from 2020 San
Juan Boulevard to 300 West Arring
ton.
■ B IL L GRAYE has resigned as presi
dent, Valley Bank, Farmington, and re
turned to his previous post of senior
vice president, Citizens Bank, Farmington. Succeeding him at Valley Bank is
Charles “Ken” Campbell, formerly vice
president and commercial loan of
ficer, Albuquerque National. In other
changes at Citizens, Martin Pierce,
president, has accepted additional re
sponsibilities as chairman, succeeding
John Anderson, who has retired due to
poor health. Dennis Peterson, vice
president and cashier, has advanced to
executive vice president.
■ MICHAEL J. LEVEN SON has
been elected president, Carlsbad Na
tional, succeeding Richard Moore, who
has accepted a position in Austin, Tex.
Mr. Levenson has been with Carlsbad
National four years.
SISS O N
■ GLENN BONNER has been named
assistant vice president, First National,
Bartlesville, while William B. Davis
and Steve Warwick have been elected
assistant cashiers.
HALL
a MAY AVENUE BANK, Oklahoma
City, has announced the following elec
tions: Mary Pherigo, to assistant vice
president, and Ann Pitzer, Karol Lue-
■ RICHARD E. MINSHALL, senior
vice president and trust officer, Fourth
National, Tulsa, has been named a
member of the Energy Advocates, a
group of Tulsans that presents to in
terested parties alternative decisions on
energy and oil that confront the nation.
The group consists of Tulsans who are
prominent in the energy industry. Mr.
Minshall, the only banker of the 16
Energy Advocates, has a background
in banking, oil, law and investments.
s F. G. “M OE” CAVIN has been
elected executive vice president, First
American National, Nashville. Named
senior vice presidents were Robert G.
Lamons, Mack S. Linebaugh Jr. and
C. E. Scheuerman, while C. Richard
Bobo has been elected senior vice pres
ident and controller. At the bank’s par
ent HC, First Amtenn Corp., Nashville,
Miller F. Cheek has been named ex
ecutive vice president. Neil L. Cun
ningham, state economic development
official, has joined the bank as vice
president and director of public affairs.
as president and CEO. Charles R.
Sherman will continue as executive
committee chairman. He had served as
CEO since the 1975 resignation as
president of Mark Vorder Brugge.
■ W ILLIAM A. DICK, formerly ex
ecutive vice president, Union Planters
National, Memphis, has joined Com
mercial & Industrial Bank, Memphis,
■ JAMES R. SARTOR JR., vice presi
dent, Third National, Nashville, has
been named finance department man
ager, succeeding the late James F.
■ BERNARD P. HALL has been
elected vice president, First National,
Oklahoma City, while D. Harry
Adams, Gary F. Glasgow and Ray
mond F. Kolker have been named trust
officers.
LINEBAUGH
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
■ DAVID WANTLAND, senior vice
president, United Bank, Tulsa, has
been elected to the bank’s board.
■ CARL BALCER has been promoted
to vice president, Security Bank, Ponca
City. He heads the bank’s public rela
tions and business development depart
ments and has been named coordinator
of Security Bank’s new E F T system.
■ CHARLES RITZ has been named
vice president and comptroller of First
National, Albuquerque, while James
Scanlon and John Kelley have been
elected assistant vice presidents.
■ GARY CRANDALL has been pro
moted to assistant vice president and
assistant branch manager, Main Office,
Bank of New Mexico, Albuquerque.
kenga and Bill Marshall, to assistant
cashiers. Allie Reynolds, president, At
las Mud Co., and former pitcher with
the New York Yankees, has been
named a director.
LAMONS
BOBO
CAVIN
CHEEK
89
Duncan. Elected a bank director was
John C. Lobb, chairman and president,
Northern Telecom, Inc., also of Nash
ville. Mr. Sartor has been with Third
National since 1968.
■ F IR ST NATIONAL, Lawrenceburg,
has announced plans to construct a
new, three-story Main Office. Con
struction should be complete by June,
1977. The building will have a steel
frame and will occupy the former site
of the Lawrenceburg Hotel, across the
square from the bank’s present head
quarters. The new building will have
9,728 square feet of space on each
floor and on-site customer parking. The
structure’s exterior will be brick
trimmed with white cast stone.
■ A. M. PATE JR., president, chair
man and CEO, Texas Refinery Corp.,
has been elected a director of First Na
tional, Fort Worth.
B H ER RER T E. POUNDS JR. has
been elected vice president, commercial
lending, Frost National, San Antonio.
Named assistant vice presidents were
Tom R. Garcia, corporate trust, and
division; Richard N. Eldred, operations
group; Merle E. Karnes, international
services; and Charles W. Powers, audit
ing.
POUNDS
PATE
W. A. “Rusty” Hayes II and Sherrie
L. Mangold, credit.
Q GRETCHEN E. FORD has been
promoted from auditing officer to as
sistant auditor at Fort Worth National.
Named assistant vice presidents were
Rradley N. Rife, formerly credit officer,
and William A. Schneider, formerly
loan recovery officer.
■ F IR ST NATIONAL, Dallas, has an
nounced the following promotions: to
vice presidents, Michael C. Rarr, inter
national, and David P. Zent, opera
tions. Named assistant vice presidents
were Ralph G. Blackman, David E.
Hairston and John D. Lybrand, corre
spondent banking; James A. Lindsey
and James B. Stubbs, controller’s di
vision; Ashburn H. Bywaters Jr., na
tional; Donald W. Fullrich, retail bank
ing; Frederick D. Waldkoetter, energy
STATEMENT O F C O N D IT IO N
F IR S T P A S A D E N A
P A S A D E N A , TEXAS
AT THE CLOSE OF BUSINESS JUNE 30,
1976
RESOURCES
Cash and Due from Banks .............
Securities ............................................
$22,332,595.73
43.060,088.71
Loans .................................................
'Federal Funds Sold .........................
Real Estate, Furniture and Fixtures
Other Resources ..............................
TOTAL ..............................
...............................
...............................
...............................
...............................
...............................
$ 65,392,684.44
70,175,094.02
4,000.000.00
3,108,146.31
3,285,582.39
$145,961,507.16
LIABILITIES
Capital Stock .....................................................
Certified Surplus.................................................
Undivided Profits and Reserves .....................
Deposits .............................................................
TOTAL ..............................................
$
3,000,000.00
5,000,000.00
9,017,383.58
128,944,123.58
$145,961,507.16
M r s . M a r c e l l a D. P e r r y
S. R. J o n e s , J r .
Senior Chairman of the Board
Chairman of the Board and
Chief Executive Officer
J. W . A n d er so n
Vice Chairman of the Board and
Chairman of the Executive Committee
H ow ard T . T e l l e p s e n
J. O . K ir k
Vice Chairman of the Board
President
a EDW IN N. LETZERICH has been
elected vice president, retail banking
department, First City National, Hous
ton, while Thomas G. Macrini has been
named assistant vice president and
trust investment officer. Johnnie A.
Janicki has been appointed trust opera
tions officer. In addition, First City Na
tional has established a women’s ser
vices department with Hazel McKee as
manager.
B FO R R E ST S. WARREN has been
elected chairman and CEO of South
west Bancshares, Inc., Houston. Hubert
Gentry Jr., formerly executive vice
president, has been named president
and chief operating officer. Mr. Warren
most recently was vice president, mar
keting, Houston Oil & Minerals Corp.,
and has been a director of the HC and
its lead institution, Bank of the South
west, Houston, since 1975.
B KARL T. B liTZ JR. has joined Mer
cantile National, Dallas, as president.
He formerly was president, First Na
tional, Fort Worth. In other changes at
Mercantile National, Gene H. Bishop
has been elected chairman and CEO.
He has been named to similar posts at
the parent HC, Mercantile Texas Corp.,
Dallas. Lewis F. Lyne has been ap
pointed HC president and a bank vice
chairman, while James B. Gardner has
been named executive committee chair
man and advisory director of the bank.
Frank V. Wolfe continues as a bank
vice chairman. Charles M. Fugitt, for
mer senior vice president, First Na
tional, Fort Worth, has joined Mercan
tile National as executive vice president
of corporate relations.
B E. WAYNE CLARK, formerly vice
president,
First City Bank, Houston,
has been elected president, First City
Bank of Clear Lake, also in Houston.
Both banks are affiliates of First City
Bancorp, of Texas, Houston. At First
City of Clear Lake, Norma Parker has
advanced
from vice president
and
cashier to senior vice president, with
responsibility for commercial and con
sumer loans and operations. Ray D.
Bradshaw has been named vice presi
dent in charge of installment loans and
Anne Baerd has been elected assistant
vice president. She supervises the note
department.
Executive V ice Presidents
B . F. H o l c o m b
G. M . M agee
E. T . Sh e p a r d , J r . (and Cashier)
Senior V ice Presidents
J am es B. C la r y
W . E. M a r sh
C a r r o l l D . D avidson
W
en d ell
MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION
90
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
F. W
a lla ce
B JAM ES E. SAXTON JR. has
named executive vice president,
ital National, Austin, while John
Stahler and Barry Rodriguez have
been
Cap
“Bo”
been
MID-CONTINENT BANKER for August, 1976
Now, at a Special LOW Price . . .
This 3-Volume Marketing Library
A l l Three Manuals ONLY $25.95
1. How to Plan, Organize & Conduct Bank Anniver
saries. . . . The complete guide to procedure when
holding a formal opening, an open house, any
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trations; 12 chapters starting with “First Things
First,” ranging through “Add a Little Pizazz and
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Regular Price: $16.00
2. How to Write Bank Publicity and Get It Pub
lished. . . . The complete guide to procedure in
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them; 61 pages; 12 chapters with titles such as
“Constructing the News Story,” “Placing the News
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with News Media”; another completely factual,
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Regular Price : $5.25
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dure in evolving an effective incentive campaign to
sell bank services and/or increase bank deposits;
MID-CONTINENT BANKER for August, 1976
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
96 pages, 16 illustrations; starts by telling you
premium terms and the history of incentives, roams
through such topics as trade area studies, tying in
with current events, getting new business from old
customers, motivating staff members and conclud
ing with a series of six case histories of actual bank
promotions that obtained exceptional results.
Regular Price: $10.95
MONEY BACK GUARANTEE—If not com
pletely satisfied, return within 10 days
for full refund.
M ID -C O N T IN E N T BANKER
408 Olive St., St. Louis, Mo. 63102
Please send us by return mail:
— copies, Bank Celebration Book @ $16 each
— copies, Bank Publicity Book @ $5.25 each
— copies, How to Plan an Incentive Campaign @ $10.95 each
— SEND ALL THREE BOOKS AT THE L O W PRICE O F $25.95
□
Check en clo sed.............................
Name ............. , ............................................ Title
Bank
Street
.............................
..........................................................................................................
........................................................................................................
C ity, State, Zip
....................................................................................
(Please send check with order. In Missouri, add 4*/2% tax.)
91
elected personal loan officers. Mr. Sax
ton, a former senior vice president in
charge of personal banking services,
will manage general banking services.
■ SOUTHERN NATIONAL, Hous
ton, has elected Rockleigh S. Dawson
Jr. and Charles L. Williams senior vice
presidents. In addition, Bruce Callen
der has been named international bank
ing officer and assistant cashier, while
Thomas S. Schoettlin has advanced to
installment loan officer and assistant
cashier.
■ STEPHEN L. STILLM AN has been
elected banking officer and credit de
partment manager at Continental Na
tional, Fort Worth. He joined the bank
in 1974.
■ RONNIE WARD has been elected
assistant cashier and installment loan
officer, National Bank of Odessa. He
formerly managed the Odessa Office,
Universal CIT.
■ ARTHUR A. DUCK has been
named vice president, First State,
Houston, while Edward F. Burke has
been promoted to assistant vice presi
dent and Stephen R. Brossett has been
elected assistant cashier.
■ F IR S T NATIONAL, Amarillo, has
announced the following elections: Jim
Brewer, to assistant vice president and
security officer; Jack Hall, to assistant
vice president and accounting depart
ment manager; James C. Stephens, to
assistant vice president in charge of the
loan and discount functions, commer
cial loan department; and Dennis Kel-
■ HECTOR M. ORTIZ has been pro
moted to senior vice president, com
mercial loan department, Frost Na
tional, San Antonio. He has been with
the bank 34 years.
■ L. CARL STOCKHOLM III, for
merly vice president and loan officer,
Gulf Coast National, Houston, has
joined Town & Country Rank, Hous
ton, as vice president.
■ WANDA HEN SLEY has been
named assistant cashier, Main Bank,
Houston. She has been with the bank
since 1969.
■ F IR S T BANK, Richardson, has an
nounced these changes: Russell Koym,
to comptroller; Earl S. Holland, vice
president, to head of the trust and
leasing departments; and Pat Sheehan,
to assistant cashier in charge of the
credit department.
Fourth N ational Bank, Tulsa ........................... 29
Fourth N a t’l Bank & Tr. Co., W ichita .......... 51
Index to Advertisers
Am erican Fletcher N a t’l Bank & Tr. Co.,
Indianapolis ......................................................... 73
Am erican N a t’l Bank & Tr. Co., Chattanooga 65
Bank in Houston Closed
HOUSTON—Northeast Bank was
closed June 3 by the Texas banking
commissioner and the FDIC named
receiver. Its deposit liabilities were
assumed by the new First City BankNortheast, highest bidder among five
groups. First City Bank-Northeast
opened June 9 in the closed bank’s
former quarters, with initial capital
of $1,250,000.
The new bank was organized by
five individuals, all of whom have
been associated with First City
Bancorp, of Texas, a Houston-based
bank HC. Its lead bank is First City
National, Houston. It’s anticipated
that once the necessary legal re
quirements have been met and
necessary supervisory approvals ob
tained, the new bank will be
acquired by First City Bancorp.
Northeast Bank was not a mem
ber of the FDIC.
logg and Paula Procopio, to assistant
cashiers.
Bank B uilding Corp. ............................................
Bank C elebration Book ........................................
Bank Incentive Book ............................................
Bank P ublicity Book ..............................................
Bank of A m erica .....................................................
Bank of O klahom a ................................................
B oatm en’s N ational Bank, St. Louis .............
19
91
91
91
13
59
75
Central N ational Bank, Chicago .......................
Central Trust Co., C incinnati .........................
C itizens Fidelity Bank & Tr. Co., Louisville
C om m erce Bank, Kansas City .......................
C om m ercial N ational Bank,
Kansas City, Kan.................................................
33
5
87
69
H arland Co., John H ................................................
H arris Trust & Savings Bank, Chicago ........
Harrow Sm ith Co......................................................
Howard Personnel, Inc., Don ...........................
57
67
84
92
Illinois Bank B uilding Corp................................ 74
Insured C redit Services, In c ................................. 63
Integon Corp............................................................... 49
Kansas Bank Note ................................................
77
Le Febure Corp.......................................................... 21
Liberty N a t’l Bank & Tr. Co., Louisville . . . . 37
Liberty N at'l Bank & Tr. Co.,
O klahom a City ....................................................
2
M G IC -Indem nity Corp............................................
M e ilin k Bank E quipm ent ....................................
M ercantile Bank, St. Louis ................................
M onteleone, The .....................................................
Morgan G uaranty Trust Co. of New York . .
8-9
79
7
80
44
85
N ational Bank of D etroit .................................... 47
N ational Stock Yards N a t’l Bank ................... 93
DeLuxe Check Printers, In c ................................ 39
Deposit G uaranty N ational Bank,
Jackson, M iss......................................................... 35
Farm ers Grain & Livestock Hedging Corp. .
First Alabam a Bancshares ...............................
First Am erican N a t’l Bank, N ashville ........
First City N ational Bank, Houston ...............
First Missouri Developm ent Finance Corp. .
First N ational Bank, Kansas City ...................
First N ational Bank, M obile .............................
First N ational Bank, St. Louis ............... 53,
First N ational Bank of Chicago .......................
First N a t’l Bank of C om m erce,
New Orleans .........................................................
First Oklahom a Bancorp........................................
First Pasadena S tate Bank ...............................
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REBUILT BANK TELLER M A C H IN E S
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34
82
17
61
58
31
22
94
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Paym ent Plans, In c ................................................. 30
Republic of South Africa .................................... 43
Risk Insurance M anagem ent Guide ............. 70
Roberts & Associates, Jack ................................ 92
Scarborough & Co.................................................... 72
Security Corp..............................................................
4
Southwestern Graduate School of Banking . 71
Union Bank & Trust, Montgom ery ................. 78
U nited Missouri Bank, Kansas City ............. 11
W hitney N ational Bank, New Orleans ........
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Ziegler & Co., B. C.................................................. 81
BANKERS
We currently have a number of outstanding
opportunities with leading midwest banks for
banking officers in trust lending, marketing,
operations, financial, etc. All fees paid. Send
resume in strict confidence to Tom Roberts,
don HOWARD PERSONNEL
69 W. WASHINGTON ST.
CHICAGO, ILL. 60602
(312) 332-2341
An executive Recruiting & Placement Agency
for the Banking community.
tractive Prices (2315, 5440, 5445 & 3340 Disks; Floppy &
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Jt
P. O. BOX 365
92
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
J A C K R O B E R TS & A S S O C IA T E S
D A TA S Y S T E M S AND CO N SU LTIN G
EDWARDSVILLE, ILLINOIS 62025
in M etropolitan St. Louis
PHONE: (618) 656-0105
FOR SALE: 12' x 45' mobile unit with wheels,
paneling, carpet, restroom, electric heat, air
conditioning. Completely equipped: night de
pository, safe, two teller windows, drive-up,
intercom, security, furniture, phone system.
Excellent condition. Murray Ellis, Leader
Federal, 158 Madison, Memphis, Tennessee,
38103. Telephone: (901) 523-2961.
MID-CONTINENT BANKER for August, 1976
Ycu can make a
Life is a song when your correspondent banking problems are turned
into challenges by S.Y.B. bankers such as Charlie Eatherton. They find
music in their work.
Charlie has authority to make decisions, that's why he doesn't play
around with your correspondent matters. He can hit the right key with
full-scale service whatever your needs may be.
Make a note of this, and you, too, will strike the right chord when you
call Charlie, or one of the other authoritative officers at 618-271-6633.
"Y O U R
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B A N K E R 'S B A N K "
J u s t a c r o s s t h e r iv e r fr o m S t L o u is
THE NATIONAL STOCK YABDS NATIONAL BANK
OIF N A T IO N A L C IT Y
N A T IO N A L S T O C K Y A R D S , IL L IN O IS 6 2 0 7 1
How pur bank can help your bank
grow w ith your farm ers and ranchers.
The world’s appetite for food and fiber is getting bigger
all the time. So today’s demands for agricultural financing
may be more than you can handle with available funds.
First National Bank in St. Louis is ready to help
you and your customers.
With funds for operating and production loans,
machinery and equipment loans. With leasing
plans and exporting assistance.
Even investment and estate planning
to help them conserve their assets.
You’ll find us easy to work with, and
we’re staffed to respond quickly. Our
Agricultural Department is headed by
Neil Bergenthal, Vice-President, who
has 20 years of farm credit experience
in agribusiness and the U.S. Farm
Credit Administration.
Call Neil at (314) 342-6695. And
send for our new brochure, “The
Changed Nature of Agricultural
Financing.”
And grow with your farmers
and ranchers.
First National Bank
in St.Member
Louis
W 7m
FDIC H
IH
510 Locust, St. Louis, Mo. 63101
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
@FedFRASER